January 2013 by Toronto Business Times

TBT TORONTO BUSINESS TIMES

Winner of Local Media Association’s 2011 award for Best Business Publication

JOB WELL DONE

A selection of the Good Works being done in the community Page 12

Franchise player

We talk to Lorraine McLachlan of the Canadian Franchise Association Page 13

February 2013

www.torontobusinesstimes.com

Besting the winter blahs Tips to boost workplace morale during the colder, darker months MARIA TZAVARAS tbt@insidetoronto.com

The months following the holidays, with their joyful gatherings of family and friends, can be challenging for employees. Coming off the holiday high combined with the heaviness that the winter months can bring, as a business owner, you may find your employees are returning to work not refreshed and re-energized, but suffering from a case of the winter blahs. The New Year is the ideal time to set and meet new goals, strive for bigger and better things in your business, and you need your employees fully alert, motivated and on board as they are an integral part in making that happen. Alfonsina Chang, a human resources professor and coordinator at the Centre for Human Resources, Seneca College, said the lack of motivation is normal for some after the holidays, but can also strike employees anytime of the year. This is why it’s important to maintain a welcoming, family and fun type of work environment with a culture that’s dynamic and exciting regardless of the time of year. “Employees should want to look forward to going to work, and it’s more likely they will if they know this is the type of >>>SENSE, page 7

Staff photo/Dan Pearce

Peter Druxerman, a co-owner of Druxy’s and its vice president of marketing, behind the counter at the franchise location at Eglinton Avenue and Don Mills Road. Druxerman is one of the seminar presenters at The Franchise Show, presented by the Canadian Franchise Association on Feb. 23 and 24 at the Toronto Congress Centre.

Upcoming: The Franchise Show sets down in Toronto Feb. 23-24 Canadian Franchise Association has more than 550 businesses as members, operating more than 40,000 locations ERIC HEINO tbt@insidetoronto.com

he largest event of its kind in Canada, The Franchise Show is coming to Toronto. For two days on Feb. 23 and 24 the Toronto Congress Centre will be transformed into a forum for more than 100 franchises to reach out directly to the public, eager to

expand new locations in Ontario. The event features the opportunity for anyone to speak directly with the franchisors and is also an educational experience for those new to the franchising game. There are various seminars from industry experts throughout the weekend and the ability to have your questions answered face-to-face by industry

insiders. Several franchise-themed events roll through Toronto each year but The Franchise Show is the only one hosted by the Canadian Franchise Association (CFA). All participating businesses are members of the CFA, which has developed a reputation of representing stable and successful franchises since 1967. It now boasts a membership of more than 550 businesses that operate over 40,000 locations across the country. At the top of the CFA sits Lorraine McLachlan, president

and CEO. She has her hands in everything from board meetings to education programs to dealing with individual franchisors. She needs to keep her life highly organized and also has a few tips for getting the most out of a visit to The Franchise Show. “There is really nothing that can replace the opportunity to be able to talk to a number of different franchisors in a short period of time so you can compare the different opportunities that are there and start to figure out what is going to be the right one for you,” said McLachlan. >>>KEY, page 8

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TORONTO BUSINESS TIMES - February 2013 - 3

Bu s i n e s s F i na n c i n g

L i s te d

Think strategically when it comes to securing business financing

Planning, preparation keys to a successful entrepreneurial pitch REBECCA Field rfield@insidetoronto.com

eeking out financing for your small business comes after a few preliminary steps that need to be taken. Start with the creation of a carefully thought out business model, said Michael Donahue of Toronto Business Development Centre. This business model consists of two main parts, said Donahue: Understanding the need in the marketplace and what solution you have for that need. “Small businesses have to know what the value is for their customers and how they’re going to make and earn money at any point in time,” said Donahue. They have to monetize and establish how to get value in return for their service, what to charge, and if clients will pay for them. With this, you can then gain some initial investing from friends, family, or angel investors, said Donahue. The next step, according Chris Mihalicz, President and CEO at Three Point Turn Inc., is to build up your business’s credit. The software development startup gained funding from Dell and then set up a secure line of credit with TD. After securing a large portion of their cash against the line of credit, they were able to begin building credit. “Entrepreneurs need to think strategically and plan to be credit worthy,” said Donahue, who suggested getting a corporate credit card as the first stage, in order to establish credit history. “I think a large part is to make sure they have good financial records,” said Donahue on demonstrating good financial management over a period of time. As a small business, you can share those records with the bank, establishing confidence. The idea is to minimize the bank’s exposure to risk in your business. “If they’re not strong at record keeping, they should be out getting a good bookkeeper or the advice of an accountant,” he said. Donahue emphasized the importance of small businesses to develop a relationship with their commercial account manager.

Financial institutions are turning their heads towards small business financing, according to Dan Kelly, President and CEO of the Canadian Federation of Independent Business. What this means, however, isn’t an increase in financing, but more attention paid to these small businesses, he said. According to the survey that CFIB puts out on a monthly basis – Business Barometer – around 25 per cent of their clients are consistently challenged with finding financing. The survey, which came out on Jan. 2, also said that 55 per cent of CFIB’s members are receiving all of the funding they need, and 23 per cent are receiving most. “It does seem that in terms of small business’s ability to get a loan or to hang onto the financing that they need to put their products and services to market, that it’s not getting better, but it’s also not getting worse,” said Kelly. The challenges lie in a more modest economic outlook from the recent recession, he added. There is a lack of

his month’s Top 10 list contains tips for small businesses who are looking at acquiring financing.

1. Begin with a sound cash flow forecast This is not a restriction but a plan. Determine your financing requirements and your ability to pay installments and interest expense. Do not borrow more than you need, but at the same time make sure that you borrow enough to meet immediate and anticipated cash requirements. 2. Be conservative Your forecast should include known or reasonably certain cash inflows. Allow for contingencies when forecasting outflows. Use sensitivity analysis to determine where the risks lie in your forecast. 3. Review liquidity ratios before you approach the bank Make sure that you are comfortable with the planned leverage and associated risk. If need be, consider other options, such as financing with equity or a mix of debt and equity if required.

Left, Michael Donahue (staff file photo/Dan Pearce) of the Toronto Business Development Centre. Right, Chris Michalz of Three Point Turn, Inc. (photo/Courtesy). “Their commercial account manager really understands their business, what they’re out to accomplish, who their key customers are, and what their goals are for the future.” He said that small businesses should consider them to be almost a strategic partner for their business. Once your small business has established a strong business model and credit history, it’s important to plan a pitch that is ready to go at any given moment, said Micheal Nussbacher, CEO of Epilogger Inc., a social media app connecting people through event sharing. “Show them a quick overview of the company and how you plan to make money, how you plan to market a product and who you plan to hire,” said Nussbacher. Mihalicz of Three Point Turn notes that at this stage, your options are typically to fund yourself through business operation, seek out venture capitalists, as well as government programs and com-

mercial banks. He said to make sure to include a number of specifics to your company in your proposal: number of employees, projects, customers, associated partners, awards and certification, countries you’ve serviced, your debt service ratio, and your business lines. You should be asking for a specific amount, said Nussbacher. “Investors invest in the people more than anything else,” said Nussbacher, who emphasized execution as an important part of the proposal. “There’s always money for entrepreneurs who have a good idea. You have to have the tenacity to stick with it.” One final thing to make sure of is to look for ways in which investors can give you value outside of finances, whether it’s through their network or their connections in your field, said Nussbacher. “Some people think it’s a numbers game, but I think that numbers have become really small,” he said.

Looking ahead: what’s the lending climate look like for small businesses? REBECCA field rfield@insidetoronto.com

Top 10 tips to secure financing

‘I think at the end of the day, we’re going to see healthy business lending to small and medium-sized businesses.’ – Craig Alexander consumer demand, businesses are not expanding and growing as rapidly, and there hasn’t been as great a demand for financing as there has been in the past. “That’s helped in terms of tempering the concern over the availability of financing for small firms,” said Kelly. Kelly notes that banks have recognized the profitability of small businesses as customers in the wake of a cooling real estate market and reduced opportunities for lending to big businesses. Craig Alexander, Senior Vice President and Chief Economist with TD Bank Financial Group, said that Canada should expect moderate economic growth this year after a deceleration in 2012. The average rate of economic growth will be close to two per cent, in line with

the long time historical average for the economy. This moderate economic growth means rising demand in goods and services that small businesses provide, said Alexander. With less individual consumer investing in the real estate market, financial institutions will turn to investments in small and medium businesses in the coming year, he said. “We’ve been seeing business credit rising in recent quarters. Credit is flowing in the Canadian economy and access to financing has been available,” he said, adding that small business owners shouldn’t expect any accelerated lending or loosening of lending regulations. “I think at the end of the day, we’re going to see healthy business lending to small and medium sized businesses.”

4. Provide bank with a more conservative forecast than you developed internally Understand what the bank is looking for (profitability ratios, liquidity ratios, etc.) before submitting your forecast to them. Reduce revenue forecasts or increase anticipated expenses to the level that will meet the bank’s requirements, and then beat your forecast. This will build credibility for you and aid in renegotiating the terms of your loan. 5. Negotiate a loan that meets your requirements, not the bank’s Many options are available, such as how and when funds are drawn, repayment schedules, interest rates and fees. Shop around. Make sure that covenants and repayment terms proposed by the bank are acceptable based on your cash forecast. Do all this in advance of any anticipated need. 6. Monitor cash flow carefully each month and analyze any discrepancies from the planned forecast Are the differences temporary or permanent? Will they affect your ability to make future payments to the bank? Is corrective action required on your part? In other words, make sure you stay on top of your cash flows. 7. Communicate any financing challenges to your lender This is the biggest mistake companies make. They hide their head in the sand at the first sign of trouble and hope it will go away. Whatever the issue, tell the bank about it before you miss a payment, and if necessary, negotiate changes to your loan agreement. If you don’t, the bank will. 8. Revise your cash forecast as new information becomes available This should be done at least twice a year, though the bank may require it more often. Prepare an updated forecast and share it with the bank. 9. Meet with bank for an annual review This is usually required, but if it is not, ask for it. Review the previous year and how you performed against your forecast, and then review the new forecast for the coming year. Don’t be afraid to renegotiate terms. If you had a strong performance, ask for a reduction in interest rates and/or fees, or some additional room on your covenants. 10. Most important, remember that cash is king While other measures such as profitability are important, as you manage the business, always be cognizant of the effect your decisions will have on future cash flows, especially if your business is highly leveraged. n Listed is a monthly feature in Toronto Business Times. This month’s tips are supplied by George Brown College professors Deirdre Fitzpatrick and Mark Farber.

TBT

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TORONTO BUSINESS TIMES

Ian Proudfoot Publisher Marg Middleton General Manager Peter Haggert Editor-in-Chief Paul Futhey Managing editor warren elder Regional Director of Advertising Mike Banville Director of circulation VOLUME 11, NO. 4

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Editorial

Investors need to believe – in you and your product S

ure there’s Hockey Night in Canada – finally! And there’s an Amazing Race coming to Canada. But more than one family curls up around the TV at night to watch Dragon’s Den. We are fascinated by big dreams, big success and improving our general lot in life. Those are all great goals. Whether we understand it or not, while we watch such a show (or the American counterpart, Shark Tank, with many of the same players) it’s providing valuable subtle education on dealing with reality in the business world. That’s also why the information provided by our expert panel on Page 5 is an invaluable resource for the small business entrepreneur. When we ask entrepreneurs about the single biggest issue they face, the answer invariably has been funding. And over and over they ask how best to impress an investor. So, look at the advice on

the next page and think hard. Consider the differing points of view. Consider the weight some attach to various aspects of an enterprise business plan. And look really hard for the similarities of message. Can you competently answer the questions these experts pose? Can you back their considerations up with fact that would make your business attractive for investment? You’d better be able to. You’d better be able not only to answer these questions of your self competently, but also extend your answers to facts above the usual and expected. You want to leave a potential investor intrigued about the revenue potential – not necessarily the coolness of the product or service. There’s big competition for limited dollars. You really need to wow ‘em. It’s their money. An investor is not a charity. An investor doesn’t need to gamble. They need to believe in you and your product. Your investor might be look-

ing for a return of five to 10 times the amount of their investment within three to five years. That’s a big number that means you need to hit that ground running – you need to know where you’re going before you get your money. No one’s going to want to tie up their money and wait for you to grow a plan. Frankly, your relationship with your business is no different than any other relationship in life. It’s the classic relationship between head and heart that determines the success of a good small business. Put too much weight into what your heart says and it overrules good business decisions. Put too much head into it and you may just lose the ‘common touch’ that can give a business traction with a customer or consumer. And remember, good household and life practices can give an investor confidence in your business decisions too. So, keep a clean credit record.

Column

Sketch out your improvement plans

t’s a new year and, before you get too immersed into a daily grind of activity, take time out to sketch out your very own improvement plan. One advantage of living in such a large metropolitan area, is there is no shortage of business organizations, consultancies and education institutes. So what do you want to learn this year? In some cases, organizations have their full-year seminar calendars fully developed. In others, they look a couple of months ahead. Cruise through some of the usual suspects who provide business guidance and get a feel for the kinds of topics they host, the frequency of topics and the cost. Decide now how much money you might want to set aside during the year for training, or seminar attendance and networking. And be choosy if you are on a budget. While early months of the year are sometimes light on business transactions they can make for extra downtime for further studies or seminar attendance. But don’t blow your budget early, because you never know if something even more enticing will be offered in the second half of the year. ***** All that said, here are some

EDITOR’S DESK

PETER HAGGERT interesting and upcoming learning opportunities provided through Enterprise Toronto: Managing your Cash Flow is the topic of a free session Feb. 21 at the North York Civic Centre. It’s a hands-on workshop designed to put you through real-life cash flow scenarios with the help of real-life examples. It’s meant to help you maximize your cash flow and minimize the need to borrow. The 10 to 11:30 a.m. event is at the North York Civic Centre, Room 3. To register, visit www. enterprisetoronto.com Starting a Small Business (workshop) – This Toronto District School Board workshop teaches the basics of forms of ownerships, registration procedure and accounting considerations. This Feb. 28 event will be held at Western Tech school at 125 Evelyn Crescent, Toronto, from 6:30 to 8:30 p.m. Registration is $14, and is avail-

able at www.team4life.ca Just for fun, here are some statistics about the Toronto market you may or may not know. In the City of Toronto in December, the mean hourly wage was $24.40. The median hourly wage was $20.22. Both are slight increases to Dec. 2011 figures. Total employment in Toronto rose to 1,310,500 in Dec. 2012. That’s three percent higher than one month before. Interestingly, with a 9.2 percent employment growth year over year, the number of women in the workforce jumped ahead of men in Dec. 2012. The ranks of the self-employed fell to 195,500 in Dec. 2012 from 220,100 one year earlier. That represents an 11.2 percent decrease in the self-employed who, as of December, made up 14.9 percent of the workforce. Every month we feature a collection of stories on a central theme. This month, it’s business financing. Next month, it’s training – yet another high interest of the entrepreneur. But you tell us – what are the themes you’d like to see explored in future editions of Toronto Business Times? n Peter Haggert is the editor-inchief of Toronto Business Times. His Editor’s Desk column appears monthly. He can be reached at phaggert@insidetoronto.com

Opinion

Taking the plunge? The value of preparation Y ou can see it in Lorraine McLachlan’s interview on page 13. In Peter Druxerman’s comments in our cover story as well. Our experts on the facing page all talk about it as well on some level. And it’s elsewhere in this publication, too. The common thread, even if the actual word wasn’t always explicitly stated, is this: Preparation. In the case of McLachlan and Druxerman, their comments had to do with the various aspects of franchising. That includes things like how to be an ideal franchisor or franchisee. McLachlan, in her role as the president and CEO of the Canadian Franchise Association, spoke about the due diligence process one should follow, Druxerman about finding that proper fit with a franchisor and the necessity of knowing exactly what you want before you reach out in a bid to be a franchisee. In the case of our experts on the facing page (and the previous one as well), it’s about finding and securing financing, and knowing what options are even realistic depending what stage your business is at. Vastly different subject matters, but preparation is an important common denominator. Why wouldn’t you do everything in your power to be as ready as possible? Risk is

NOTEBOOK

Paul Futhey involved. When you’re committing your time and your money to follow your passion, and you’re ready to move along in a process, preparation’s a must. Even so-called impulsive business decisions often have years of experience and memories of sound advice guiding those decisions. The path to success and financial sustainability in business can be arduous. It usually takes a lot of wise, informed choices just to keep you on the right path. By the same token, it takes very few poor choices – sometimes only one – to guarantee failure. Know yourself. Do your research. Make a plan. Be aware of your options and be prepared – for the good and the bad that may come – so that you always know what your next step is. n Paul Futhey is the managing editor of Toronto Business Times. His Notebook column appears monthly. He can be reached at pfuthey@insidetoronto.com

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op in ion Each month, Toronto Business Times solicits opinions from experts on a question of relevance to the small business community. This month’s question is: What advice would you give to the small business owner looking to obtain financing?

Research and preparation are Financing: How to increase the important factors for success chances of a positive response O W

available to do this. Pay btaining financing particular attention to for both start-up cash flow, and look at and operational different scenarios (e.g., costs can be one of the bigbest case/worst case). Ask gest challenges for small your financial advisor to business owners. So before review your plan you go knocking in advance and on lenders’ doors, Meridian don’t be afraid to you need to be be critiqued. It is prepared in order important to know to increase your Jeff the potential gaps chances for sucBrown you’ve missed. cess. Very imporResearch your tantly, know your options: Know numbers. You should be what types of financing comfortable with your are out there. Options margins, costs, business include debt financing (bank loans, leases), equity cycle and competitors, and have completed a full financing (investors, angel SWAT analysis before talkinvestors, family meming to any possible lender. bers), grants (government Put some “skin in the and community) and vengame”: Your idea is probature capital financing. And bly a great one, but lenders consider flexible financing want to see some financial options that don’t just commitment from you focus on rates and fees. before providing funds. Each of these has different features, and not all will be Plan to also have excess funds to cover shortfalls. right for your business. Now when it comes to Also, understand what the financing of operaa potential lender will tional costs, there are need before you actually some key actions you need the funds. Ask about timelines so you don’t acci- should take to ensure your ongoing success. dently make commitments Keep your financing you can’t meet to potential sources in the loop: What suppliers and contractors. happens if you want to Prepare a business buy a piece of machinery, plan: Take advantage of or perhaps the building the many free resources

you are leasing comes up for sale? Can you afford to undertake these commitments? Understanding what levels of financing your business can handle means you won’t be left with your lender saying no after you’ve entered into an agreement to purchase something. Develop a “Board of Directors”: This doesn’t need to be a formalized board, but rather a group of trusted experts, such as financial advisors, accountants, lawyers and other professionals, who have experience in aspects of your business or situations you encounter, and can offer important guidance at critical times. As your business grows, you need to work with a financial services professional that understands your unique needs and knows when to bring in other specialists as required. Consider working with a Small Business advisor who has expertise in your area of business. They will know how to best assist you when there are bumps in the road. n Jeff Brown is director of small business for Meridian.

hether you are starting up a new business or looking to expand an existing one, you need resources for your business. Some businesses can start with a minimum of capital. But others may have to lease space, or purchase inventory or equipment. You may have saved some money, or perhaps you are able to borrow from family, but often entrepreneurs need to look for an outside source of financing. Here are some helpful tips: 1. Write a wellresearched business plan that will show the lender that you know your customer, the value you bring to them and why they will buy from you. Have a detailed marketing and sales plan to support your financial projections, and include information about past sales or strong future prospects. Also, include a resume or bio that demonstrates that you have the necessary skills and experience to make your business a success. 2. Include one to two years of cash flow projections that are conservative. Lenders know what

Rise Asset Development Sally Wilkie

revenues and expenses are typical for your type of business, so be realistic. Projecting very high sales, particularly in your first year of business, will cause you to lose credibility with the lender. 3. Clearly outline what the loan will be used for and try to get by with as little financing as possible. Look for ways to save money and cut costs. Think through how you will make your loan payments if sales are lower, or slower coming in than you have projected. 4. Know your credit history. You can request a credit report on yourself from Transunion or Equifax without it affecting your credit score. Sometimes there are mistakes that you will want to get corrected before applying for a loan. 5. Show the lender what you have invested in the business, either cash or other assets. Lenders want to know that the owner is also taking on some of the risk of financing the busi-

ness. Even if you have done all these things, you may be turned down by a mainstream financial institution. Your credit score may not be high enough, you may not have enough collateral or your personal financial situation may not be strong. Traditional lenders are often very conservative, particularly with start-up businesses. Micro-loan funds, which generally serve specific populations such as low income earners, women, youth, or persons with a disability, are a great alternative. They are usually more flexible around credit history and collateral requirements. They may also provide some assistance in preparing a business plan and some microfunds are now providing entrepreneurs with mentorship. Access to capital and mentoring advice are definitely important contributors to small business success. n Sally Wilkie is the Program Manager at Rise Asset Development, a Rotman/ CAMH financial initiative providing microfinance and mentoring to entrepreneurs with a mental health or addiction challenge.

Other financial options available Know your benefits and risks W OB when traditional ones fall through R

o, what advice would I give on obtaining financing? Google it. Seriously. Here you will find every relevant link to every institutional option available to you, both nationally and locally. You will find everyone from the major banks to the BDC to the Canada Small Business Financing Program. Unfortunately, here is where you will discover what you already know: unless you have a high net worth, equity you can leverage and an excellent credit rating, easy financing just isn’t in the cards. But there’s good news – this isn’t the end of your dream! Assuming you have a fantastic business plan, industry experience, and invested all of the personal savings you could afford to part with, and your bank has (politely) said no to your request for the 18 months of seed money you will need, you only have a few more options: bootstrapping, grants, and Angel investors. Bootstrapping is the process of building a business in your spare time, with little or no money, slowly chipping away at your solution and the market you are trying to disrupt. It is

ShiftHub Jeremy Potvin as awful as it sounds. We did it for about a year. It’s stressful and exhausting. However, if you have a solid business plan, huge market potential, and a great group of partners who share your vision, it is what you must do to get you to the next stage. I wish someone had told me to look into what grants were available far earlier. When we did start actively pursuing all available options, we were successful. It wasn’t a ton of money – nowhere near the 18 months that we needed – but it definitely helped. Start looking at your options – immediately. Angel investors are high net worth entrepreneurs looking for investment opportunities with a high reward potential. Guess what – they love risk! Your business was made for them. They are looking for the opportunity to get in early on the next big thing. You are this next big thing – and you better believe that or you are wasting everyone’s time.

Get your pitch deck in top shape, practice your story, tap your social networks, and start looking for them. Everyone knows at least one successful person. Call them right now. Pitch them. The worst thing that can happen is that they say no. Most likely it will lead somewhere – a face to face meeting, an introduction to another Angel, or at the very least some great insights that will help improve your pitch for the next Angel you end up in front of. Also, make sure your online presence – including LinkedIn – is up to date and looking great. This is where angels will backchannel you. Finally there is an incredible new platform out there designed to help the new entrepreneur get advice from those who’ve been successful before – Clarity. fm. Whatever insights you need, you’ll find someone there who can help, and is willing to book a call with you. I am a member. So if anyone wanted more information on how to pitch an angel investor, for example, I’d be available. I seriously would love to help out in any way that I can. n Jeremy Potvin is CEO at ShiftHub.com.

egardless of your funding sources, these things need to be taken into account: • It is essential to establish a business or personal relationship before you ask for money. • Most investments come with strings attached, including relinquishing some level of control. • The type of business determines the type of funding. If funding a small business, then go to friends and family and banks. For expansion, other sources of funding are more appropriate. • Angels and VCs are looking for returns of five to 10 times their investment within a three-to-five-year period. • You need a cash flow strategy to handle disruptions in your income and expense streams. Remember that “Cash is King”. Let’s look at potential funding sources based on five stages of business development (conceptual, prototype, launch, initial sales and expansion): Friends and Family Stage: Conceptual, Prototype. Description: Personal relationships. Benefits: Easy access, little red tape, very low interest rates. Risks: Risk to relationships, limited funds available, limited business

f iz

Reg Carney

advice. Own Savings Stage: Conceptual, prototype. Description: Your savings. Benefits: Easy access, no “red tape”, low or zero interest rates, no obligations. Risks: Limited funds available, no independent viewpoints. While employed Stage: Conceptual, prototype. Description: Start venture while employed. Benefits: Money to fund venture. Risks: Less time on venture, legal complications. Loans Stage: All. Description: Banks/Credit Unions. Benefits: Inexpensive interest rates, some financial advice available. Risks: Personal assets seizure, financial plan needed, financial history 3+ years required. Government programs Stage: Conceptual, prototype. Description: Many programs. Benefits: Cheap money, provincial and federal government programs. Risks: Finding right programs, long approval lead time. Investment by Angel(s) and VCs Stage: Prototype, launch,

initial sales, expansion. Description: Expectation of part ownership, IPO or sale. Benefits: Angels offer medium-sized funding, VCs offer large-scale funding, no personal assets at risk, increased credibility, business advice available. Risks: Difficult to get, answerable to others, loss of some control, business plan needed, for VCs, need income of greater than $10 million. Customers/clients Stage: All. Description: Existing customer/client investment. Benefits: Initial funding, no personal assets at risk, increased credibility, learn market needs. Risks: Dependent on single income source. Factoring Stage: Initial sales, expansion. Description: Sell part of A/R. Benefits: Cash available quickly. Risks: Funds limited to part of A/R, high cost, need sales track record, lowers credibility. Stocks/Bonds Stage: Expansion. Description: Sell stock/ bonds. Benefits: Massive funds. Risks: Must be successful first, costly to qualify. n Reg Charney is a serial entrepreneur who is currently Co-Founder and CEO of http:// WizOf.Biz, a web-based consultancy that is your source for trusted confidential business advice and feedback on all forms of business communications.

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Op i n i on

Dealing with the ‘isolation factor’ 2013 trends: even more change

ne of the biggest surprises for people new to self-employment or home office-based work is the isolation factor. While it may be viewed as the optimum work environment – complete with freedom and the ability to work in your pajamas all day if you want to do so – there are some drawbacks. At one time you may have wished to be far, far away from your cubicle mates only to now find yourself making random phone calls in the middle of the day to connect with another human being. This feeling of isolation or disconnection can also lead to a lack of productivity, a lack of discipline and a general feeling of despair. You may even begin to question whether this selfemployment thing is for you after all. Before you throw in the towel on this independent work arrangement, consider some of the following suggestions you can employ to reduce the isolation factor in your day-to-day work. n Go where your ‘peers’ hang out: No matter what the nature of your business, there are networking groups and associations that provide opportunities for people to meet. Try meetup.com to find live and virtual meetings for groups of people in your area who have similar work. You will also find general business groups of other home office

Coach’s Corner

Sonia Byrne workers also seeking to connect. n Go where your customers hang out: Your customers belong to particular industries that will also have association groups for people to meet each other. Most associations will allow ‘vendors’ or ‘suppliers’ to join as partners to members if they are providing services to that particular industry. This can be a way to meet new clients and to grow an existing niche in your business. n Go where the business grows: In every city across the country there are chapters of formalized business networking groups that focus on creating mutual growth through referrals between local businesses. The BNI (Business Networking International) groups are the most structured for business networking but BIAs (Business Improvement Association) can also be a good place to network in your own neighbourhood. There are also groups such as Rotary Club or Kiwanis that are

philanthropically based but provide an opportunity to meet other local business people. n Go anywhere you can work – that’s not your home: There is an entire industry devoted to providing temporary or shared office space in your area. Simply look it up online or check your local newspaper. Some offices provide private space to meet clients outside your home (and not in a coffee shop) as well as shared or community space to help self-employed people connect with each other. However, sometimes a coffee shop is exactly where you want to be to work effectively. n Get with an accountability partner: Through all this networking and meeting like-minded people, you will certainly connect with a few other self-employed individuals who are dealing with some degree of isolation in their own day-to-day business. Offer to make regular ‘work dates’ or coffee meetings to get each other out of the house. Take the opportunity to share some of your business challenges and goals...like a gym partner, you can help keep each other accountable and reduce the isolation factor for both of you. n Sonia Byrne is a business and life coach. She can be reached at www.soniabyrne.com

nyone immersed in the world of technology knows the amount of change we’re experiencing in consumer electronics is surging ahead faster than ever before. 2012 was a big year for tablets, software and gaming. Yet in 2013, expect the digital revolution to keep speeding up in ways that connect you to more than just a laptop. Digital is going domestic. Here’s some of the top trends to watch for in 2013: n Smart TVs go mainstream: After years of people moving away from televisions as the centerpiece of home entertainment, 2013 looks like the year in which that trend finally reverses for good. Smart TVs – Internet-connected televisions that employ the use of apps, browsers and Wi-Fi – are suddenly hitting it big after a few years of being relegated to early adopters. It’s easy to see why Smart TVs are so appealing: they offer everything from live Twitter feeds, easy plugging-in of your favourite videos through USB hubs, and much more. For years, people have been predicting the eventual convergence of the Internet and television into one hub – 2013 is the year this will truly begin in earnest. n The resurgence of

TECH TALK

GREG HUGHES Microsoft: It hasn’t been an easy last decade for the Redmond-based computing giant, but signs emerged in 2012 that the company has finally absorbed the lessons of Apple’s success. 2013 could be a big year for Microsoft, as the company goes all-in on its much-lauded tablet computer, Surface. Windows 8, while suffering mixed reviews, already looks like a key component of the company’s future. Yet the most exciting efforts from Microsoft are coming out of their mobile efforts, with the Windows Phone enjoying great reviews. Expect this to be a very good year for Microsoft. n Mobile payments take off: While Asian consumers have been using their phones to pay for transit, coffee and food for some time now, North American markets will, at long last, step up to the plate in 2013 in the mobile payments market. Near-Field

Communication (NFC) chips allow consumers to tap their phones at a merchant’s payment kiosk, and there are indications that more smartphone manufacturers will be introducing this technology to future versions of their devices. There’s already apps out there to put mobile payments into action; Google Wallet – an e-payments service that uses NFC technology – may be coming to a smartphone near you soon enough. Expect consumers to demand these kinds of services more in 2013. n Gesture-based computing explodes: The single most anticipated digital device of 2013 is a new, USB-powered hub called Leap Motion. Why is this device so hot? It uses remarkably accurate hand gestures for computer users to virtually type emails, play games and draw. In effect, it’s a primitive version of the gesture-based computing in the 2002 sci-fi thriller Minority Report. Add to this the growing popularity of the Xbox 360’s Kinect hardware, and it’s safe to say that this could be the year we finally start to move away from using physical interfaces in our computers. n Greg Hughes is a writer, editor and Web 3.0 junkie. Follow him on Twitter at ghughesca

TORONTO BUSINESS TIMES - February 2013 - 7

i n th e n e w s

Sense a lack of motivation? Keep these ideas in mind to energize your employees >>>from page 1 working environment they’re going to,” she said. Having good morale in the work place is essential so not only will your employees want to come to work, but enjoy working. As a result, you’ll garner better productivity. “When people have low morale it means they’re not producing the best they can, people don’t want to come to work which will result in more absences and slipping in performance in general,” Chang said. When this is occurring in your workplace, Chang said it’s easily detectable, and it could be some employees have expressed this to you or simply, you’ve been noticing the energy in the workplace is low. Here are some tips from Chang on how to help boost the morale and motivation of your employees: n Start the year on a positive note: Have a meeting with your staff and talk about all the accomplishments and goals you met in the past year, and outline the goals for the upcoming year. Providing a clear vision for the company will put employees at ease to know where they’re headed with the company

Alfonsina Chang is a human resources professor and coordinator at the Centre for Human Resources, Seneca College. and what to expect n Always have a plan to celebrate (especially after the holidays): During the holiday season, there are office parties and secret Santas, and that can be a tough act to follow. So make sure you have planned another event to gather and celebrate. It doesn’t have to be a calendar event, it can be something you and your team agree on, or make up a day where you get together and eat and socialize. It’s re-energizing and boosts morale n Communication is key: Ask your employees how they feel things have gone and what they are thinking and feeling about

the upcoming year. Let them know that you’re listening to them and respect their opinions. You want them to know they can communicate with you about their concerns, goals and ideas. Maybe they want to alter their responsibilities and have underutilized skills. Allowing them to communicate, and possibly be able to utilize their best skills, means they will feel challenged and excited about their job n Switch it up: Set up a seminar, webinar, outside courses and workshops, training and development opportunities. Show that you are invested in the long-term education and growth of your employees. It will benefit the company as well as letting your employees know you care about them as people, not just employees n Recognition: Find ways to recognize your employees for a job well done so they know they are appreciated. Recognition is crucial because employees need both intrinsic and extrinsic rewards. Bonuses and incentives are great, but a pat on the back also goes a long way. This makes them feel they are a valued and important member of the team

‘When people have low morale it means they’re not producing the best they can, people don’t want to come to work, which will result in more absences and slipping in performance in general.’

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A Special Thank You The students in the School of Hospitality, Tourism and Culture’s Festival Management class, at Centennial College, donated themed holiday trees to the Toronto Children’s Breakfast Club this past December. The students were able to share their holiday hospitality by giving to an organization that gives to children every day. A sincere thank you to the following sponsors who, without their generous support, this endeavor would not be possible. Board of Governors, Centennial College, Maureen Bavington Centennial College Residence, Sara Young Centennial College Student Association, Penny Kirlic Gervais Party and Tent Rentals, George Ogston Marketing and Communications, Centennial College, Rosanna Cavallaro President’s Office, Centennial College, Ann Buller Recruitment And Advising Office, Centennial College, Darryl Creedon School of Hospitality, Tourism & Culture, Shyam Ranganathan Spectrum of Sound, Mike Heindl Toronto Community News, Marg Middleton

Wishing all a Happy 2013.

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8 - TORONTO BUSINESS TIMES - February 2013

NEWS

Buying a franchise? Do your homework, experts urge Professional advice recommended ERIC HEINO tbt@insidetoronto.com

The Toronto area is usually sprinkled with a generous number of opportunities for small business to flourish but it is a rare case when hundreds of prospects all converge in one place at one time. That is exactly what is happening when The Franchise Show rolls into the Toronto Congress Centre on Feb. 23 and 24. Hosted by the Canadian Franchise Association, this two-day event is packed with seminars, face-to-face interaction with industry experts and the possibility of investing in more than 100 Canadian franchise systems. The Franchise Show is a great place for those interested in growing their income through franchise ownership. But there is a lot of homework and careful consideration that should be a precursor to signing any contract. “Shows like this are like a supermarket, you get to go to all the big

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buy a franchise,” said franchise reps and talk Hanuka. to them,” said Drew He thinks the first and Smylie, Centennial most important thing to College’s Coordinator of get professionally analyzed Entrepreneurship and is the disclosure docuBusiness Administration ment. Franchisors provide Program. “But be careful this document to potential because they are all going franchisees before a conto put positive spin on it tract is signed and because this is it contains a lot of a sales event for important inforthem.” mation. Because He reminded there has been no over-ambitious legal agreement entrepreneurs yet, the details of that there are a the contract can lot of ways to lose often be negotiated money by selectafter careful coning a franchise Ben Hanuka sideration. Hanuka that has high upsays this is one of front fees, large the advantages of royalty payments working with a smaller or renovation costs that franchisor because an may not be initially obviinvestor holds more power ous from a sales pitch. Before signing anything, in negotiations. “On the other hand, a Smylie strongly advises seemingly better deal can that potential franchisees be a trap in itself. Even run the deal past several with a well-negotiated outside parties including deal, some (unproven) other franchise owners, a businesses are bound to certified accountant and a fail,” said Hanuka. “Are reputable lawyer. you really prepared to be a Lawyers that specialguinea pig?” ize in franchise law are Buying into a franchise a rarity, even in Toronto. can be a great way to grow Ben Hanuka is a litigator an investment but requires at Law Works P.C. and has a lot of careful thought been a leading name in and professional advice. Canadian franchise law for Attending The Franchise the past 15 years. “I see a lot of people who Show is a great place to get started and get an idea do a lot more due diligence of whether owning a franwhen they are buying a chise will be right for you. television than when they

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An Etobicoke metal fabricator has been awarded a nearly $4 million subcontract to manufacture engine housings in the Canadian Armed Forces’ Light Armoured Vehicle fleet upgrade to better protect soldiers from Improvised Explosive Devices and mine threats. London, Ont.-based General Dynamics Land Systems-Canada awarded the subcontract to Qualified Metal Fabricators Ltd., part of its $1 billion contract with the Canadian government to deliver 550 upgraded Light Armoured Vehicles, known as LAVIIIs. The official announcement, which included Etobicoke Centre MP Ted Opitz, took place at the Etobicoke facility Jan. 15.

Key to success is understanding what you have passion for: Druxerman >>>from page 1 She said that those that have already done their homework should be able to narrow the field down to a select group of franchisors that suit their vision but first-time visitors shouldn’t just jump right into the mix. She advises planning your day around seminars to learn about the industry before making the rounds. One of the more notable franchisors at the show will be Peter Druxerman, vice president of marketing and co-owner of Druxy’s. His chain of deli restaurants has utilized the franchise system to spawn 48 locations, 46 of which are operated by franchisees. Druxerman 50 will be giving a seminar at The Franchise Show about what makes a good franchisee. In his opinion, the most important part about finding a franchisee that will be able to turn a profit is finding a personality that matches a company’s particular character. “I can train a person to slice meat but I can’t train a person to genuinely

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– Peter Druxerman enjoy a conversation with a stranger they have just met,” said Druxerman. In the past he has seen franchisees fail not because of their lack of business acumen but because they hadn’t been honest with what they wanted out of the franchise system. Each franchisor requires passion for a particular type of business and if that is lacking he thinks even the best franchise model will fail. According to Druxerman, the first step to finding success is to be honest about your personal goals and character in order to figure out what you will have passion for. After doing that he recom-

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mends touring around The Franchise Show to several booths that are not of particular interest in order to practice asking questions and interacting with franchisors. Once you are warmed up, only then should you approach the franchisors that are potential investments. “If you are going to ask a stupid question, I think it is best to ask it to someone you have no interest in,” said Druxerman. Druxerman is only one of several presenters at The Franchise Show. All participating franchisors are members of the CFA and more information and schedules can be found at www.thefranchiseshow. ca

TORONTO BUSINESS TIMES - February 2013 - 9

10 - TORONTO BUSINESS TIMES - February 2013

S u rve y s , S ta t s & S na p sh ot s Survey says... n What: The Business Barometer® Survey, courtesy of the Canadian Federation of Independent Business (CFIB). n About: The nationwide survey measures a number of elements, formulating a confidence measurement among small to medium-sized enterprises. The most recent monthly survey, released Jan. 2, had a national index of 62.6 (62.9 in Ontario). According to the CFIB, an index level above 50 Ontario means owners expecting their businesses’ performance to be stronger in Canada the next year outnumber those expecting weaker performance. Source: CFIB In addition to having results broken down by region, the survey also measures confidence by sector, highest being in the category of Finance, Insurance, Realty (71.8); the lowest sector is Natural Resources (47.1).

BUSINESS CONFIDENCE

62.9

62.6

n Scope: 889 nationwide responses from CFIB members. Nationwide survey results considered statistically accurate +/- 3.3 per cent 19 times out of 20. n Also: The survey explores a number of areas of business confidence, including hiring plans over the next three to four months, capital spending plans over the next three to four months, overall state of the business, main business constraints, major cost concerns, expectations for wage and cost hikes, and amount of credit needs being met. n Survey released: Jan. 2. n Further reference: bit.ly/tbt_cfib0113

Small businesses get small break on tax rate

Currently sits at 2.76 times that of residential DAVID NICKLE dnickle@insidetoronto.com

oronto’s 2013 operating budget debate may have seemed to be all about mayoral politics and melodrama – but for small businesses, it also delivered some incremental good news. This year, as has happened every year, small businesses received a small break on their property tax rate. In 2013, it sits at 2.76 times the rate of residential properties. The rate is within reach of the goal adopted in 2006 of reducing the rate to 2.5 times by 2015. Council adopted that plan as a part of its ‘Enhancing Toronto’s Business Climate’ initiative. Historically, businesses have paid far more property tax than residential properties. In 2006, commercial properties paid 3.68 times residential, industrial properties paid 4.09 times residential, and multi-residential properties paid 3.63 times the residential rates. In 2009, council created a new property tax class of small business, and taxed it at 3.26 times the rate of residential property tax-

By the numbers ■ Ontario outlook According to a Bank of Montreal report released mid-January, Ontario’s real Gross Domestic Product is expected to grow at the national average of 1.7 per cent in 2013. According to the Provincial Monitor report, continued investment in the auto sector represents a bright spot for the provincial economy. Job growth was 0.8 per cent for 2012, though the report noted that momentum did pick up alongside gains in the service sector. Visit bmocm.com/economics for the full report.

■ Canadian Spending File photo/Matthew Sherwood

Councillor Michael Thompson, chair of Toronto’s Economic Development Committee. payers. Each year since then, the rate has been reduced. This year was complicated by the 2012 property reassessment – meaning that small businesses will be paying a small increase of .33 per cent while residential properties will pay an increase of 2.51 per cent. But according to Michael Thompson, chair of the city’s Economic Development Committee, the annual shift will do a great deal to make Toronto a more attractive place for business. “Toronto’s economic climate is certainly moving in the right direction,” he said. “I would describe it as

being healthy and certainly will get healthier and can get healthier. And clearly we hear from businesses all the time that the tax rate that they pay is an impediment.” Thompson emphasized, however, that taxes aren’t the only factor that businesses should take into account when choosing to locate in Toronto. “Taxes are one of the important ingredients but with respect to business owners there are a number of other factors,” he said. “Lower taxes are extremely important but also access to market, access to capital, which is what we’re trying to work with.”

Canadian spending rose by 3.45 per cent during the fourth quarter of 2012, compared to the same period in 2011, according to a recently released report from Moneris Solutions Corporation. The report, known as the Moneris Spending Report, said October 2012 experienced the strongest growth (4.93 per cent), while November (3.58 per cent) and December (2.16) of 2012 had more modest dollars-spent increase over the previous year. The report noted that while the fourth quarter of 2012 had an increase in overall spending, that increase was less than the increases experienced in the three previous quarters of 2012. In terms of specific categories, restaurant spending led the national fourth quarter spending growth (5.88 per cent), followed by grocery stores (5.7 per cent) and entertainment (5.25 per cent). Of the provinces, Alberta had the strongest fourth quarter growth (6.45 per cent). Ontario placed fifth-highest, with a growth rate of 2.66 per cent. Moneris is Canada’s largest debit and credit card processor.

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TORONTO BUSINESS TIMES - February 2013 - 11

YOU R H E A LTH

Time to recharge your battery if you haven’t already MARIA TZAVARAS tbt@insidetoronto.com

We are all susceptible to the seasonal blahs, but when you’re a business owner it can be hard enough to keep your employees motivated and uplifted let alone yourself when feeling this way. The New Year is the time to strive for new goals and implement strategies to achieve them, but if you’re feeling overwhelmed and underenthused it can be challenging to strive to make or meet those goals. Shannon Waller, a business coach for entrepreneurs at Strategic Coach in Toronto, said if you’re feeling this way, it could mean you didn’t take enough time off over the holidays to totally disconnect from your business. “A lot of entrepreneurs, one of their biggest dangers is they go into a new year, where they should be on deck to be creative and come up with new solutions, and they don’t do it rested...so they drain their battery,” she said. Waller said since 2012 was a tough year for many business owners, they should feel relieved to start fresh. If your feelings or attitude says otherwise, you need to address that. An indicator that you’re feeling less than optimistic is if you’re predicting your business will be the same as it was last year. Waller said this outlook is extremely de-motivating for business owners. Other indicators are if you’re moody, procrastinating or feeling uninspired. Waller said this will eventually affect

your employees and your bottom line, so you should address this long before it gets to this point. Here are some tips from Waller on what you can do:

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■ Exhausted? Take free days. This is 24 hours, midnight to midnight where you do absolutely no work, including conversations, emails or anything to do with your business; ■ Perception is everything. If you’re only measuring yourself by your ideals instead of how far you’ve come it can be immensely de-motivating. Instead, look at the progress you have achieved instead of focussing on what you have yet to do; ■ Reach out. It could be a business coach, peers or friends, but it has to be people who will help you get into action, connect with your real goals and help you to become creatively inspired; ■ Delegate. If you feel you’re doing things that aren’t in alignment with your unique abilities, or your passions and strengths, it can zap your energy. If you can, hire someone to delegate those tasks to allow you to really focus on your unique abilities.

Full-day conference on franchise law at Old Mill Inn with an emphasis on important lessons to be learned from the leading cases. Attendees then have the opportunity to choose three out of six unique concurrent workshops designed to help franchise systems understand the legal issues relevant to the current economic climate and excel despite these challenges including eight roundtable discussions. To register or for more info, visit http://www.cfa.ca/ Events/Regional_Events/ LawDay/default.aspx

WestJet boss Saretsky at Speakers Forum Feb. 27 Gregg Saretsky, the president and CEO of WestJet, is the guest speaker at the next Speakers Forum which will be held Wednesday, Feb. 27, from noon to 1:30 p.m. at the

– Shannon Waller

■ Same outlook? Challenge yourself to set bigger, more interesting goals. They need to be different enough so you will get inspired and stimulate yourself to go have new conversations, read new books, meet new people and think new thoughts;

U P C OMI N G

The Canadian Franchise Association’s Ontario Region is hosting a full-day conference on franchise law Thursday, Jan. 31, 8 a.m. to 5 p.m. at the Old Mill Inn in Toronto. The conference on ‘bridging business and the law’ will feature expert speakers and session leaders that are among Canada’s foremost lawyers and in-house counsel as well as franchisors. The conference will highlight the latest franchise-related legislative developments and case law,

‘A lot of entrepreneurs, one of their biggest dangers is they go into a new year, where they should be on deck to be creative and come up with new solutions, and they don’t do it rested...’

Albany Club, 91 King St. E. Saretsky will be speaking on the future of air travel. Seating is limited.To register, visit http://www. speakersforum.com

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N e w s , N otes & Na me s Microlending for Women in Ontario program announced The Province of Ontario announced in January it is helping over 800 low-income women build and grow their own businesses. Through the new Microlending for Women in Ontario program, six notfor-profit organizations, including Toronto’s Connect Legal, will receive funding to support low-income women who are seeking to start their own business. The organizations will offer financial literacy training, entrepreneurial mentoring, skills development and life skills support. Specifically, Connect Legal will provide women in microlending programs with tailored workshops to address important legal issues related to microenterprises Women who become business ready through these programs will be eligible to receive small loans, or microloans, to start their own business. Close to 400 microloans will be given out across the province. According to a provincial government release, the microloans are traditionally targeted towards low-income individuals who lack the credit history or collateral to start their own businesses. For more information, visit bit.ly/TBT_microloan

Catering excellence finalists

Business for the Arts Photo/Aaron Vincent Elkaim

Business for the Arts President and CEO Nichole Anderson, Etobicoke Centre MP Ted Opitz and federal Canadian Heritage and Official Languages minister James Moore gathered for a high profile arts and culture funding announcement Jan. 10 at Daniels Spectrum, the new cultural hub of the revitalized Regent Park community. The federal government announced a $2-million investment in Business for the Arts’ artsVest initiative which helps match up potential business sponsors with worthy arts and culture organizations.

Ryerson announces ethical leadership program A recent gift from Jim Pattison, founder and CEO of The Jim Pattison Group, will support the Ted Rogers Leadership Centre to establish The Jim Pattison Ethical Leadership Education and Research

Program – focused on educating Canada’s next generation of business leaders. According to an announcement from Ryerson University, The Ethical Leadership Education and Research

Program will better prepare Ryerson students for the Canadian marketplace by providing them with an enhanced understanding of the values, attitudes and practices of ethical behavior and leadership and how

to best apply these values to everyday business decision making and organizational practices. The program was scheduled to have an official launch at the end of January.

A pair of Toronto enterprises are among the 26 finalists announced by Catersource Magazine, Conference and Tradeshow for the 2013 Achievement in Catering Excellence (ACE) award. This prestigious award represents the top caterers in all aspects of event execution and recognizes nominees in four regions of the United States – East, South, Midwest and West – as well as International caterers. Toronto’s Daniel et Daniel Event Creation and Catering and Seventh Heaven Event Catering, are finalists in the International category. Finalists must demonstrate excellent business acumen, top presentation skills, a commitment to culinary innovation, sales and marketing expertise, and excellence in all areas of event execution. Winners will be announced at the general session of the Catersource Conference & Tradeshow on March 11.

G ood Deed s Boosting job prospects for Rexdale youth

Energized

mployees from the five major banks – BMO, CIBC, RBC, Scotiabank, and TD – came together through United Way to engage Toronto youth in learning about diverse careers within the financial sector. Many youth in Toronto are struggling to find work. With the unemployment rate for youth close to 20 per cent in Toronto – six percent higher than the national rate – the unique opportunity in early December provided young people with a chance to meet and talk with banking professionals in an interactive, one-on-one setting. “Canada’s banks continue to go above and beyond in their efforts to help build a stronger city,” said Susan McIsaac, President and CEO of United Way Toronto, in a press release. Students had the opportunity to ask questions and meet with people such as branch managers, financial planners, customer service representatives and financial services coordinators. “It is great to see so many employees from competing banks come together to make a difference in the community we live in,” said Amra Munawar, Hub Director, Rexdale Community Hub.

CIL and Habitat team up Just before the holiday season, Ariel Viaje, left, and his children Patrice and Patrick celebrated after being presented with keys to their new Scarborough Habitat condo unit, sponsored by CIL paints. In addition to having donated $20,000 to support the purchase of the new threebedroom, two-bathroom condo unit, CIL donates $100,000 in paint each year to Habitat projects nationally.

Grabbing and Giving The Yorkville & Whole Foods Market Customer community was very generous during the month of December, donating nearly $21,000 through the Whole Foods Market holiday Grab & Give fundraising campaign for the Toronto People With AIDS Foundation’s (PWA) Essentials Market (food bank).

Results from the campaign, which lasted for all of December, were released Jan. 16. With the funds that were raised 300 client visits to PWA’s Essentials Market had been supported, according to Kevin Borden, PWA’s Food Programs Coordinator. Visit pwatoronto.org to learn more

Scarborough’s Adventure Place benefitted from a $2,500 donation from DirectEnergy recently. From left to right: Patricia Wilkinson, Development Manager, Adventure Place; Paolo Berard, Head of Legal, Direct Energy and Board of Directors, Adventure Place; Cheryl Webb, Executive Director, Adventure Place; Dave Walton, Director of Home Ideas, Direct Energy; Axel Noriega, Board of Directors, Adventure Place; and Mallory MacEwan, Adventure Place. Through the Reduce Your Use For Good program, Direct Energy offers non-profits up to $100,000 to implement energy-saving changes to their operations, and awards grants in $2,500 increments. Grant applications are available online at ReduceYourUseForGood.com and on the Direct Energy Facebook page.

We can Work It Out About 100 people worked out together at Lansing United Church to support a new non-profit organization: Shaping Her Esteem (SHE). Participants raised $3,300 that will go towards helping start up a ‘StronGirls’ fitness class. Participants of all ages took part in the workout taught by certified instructors from Work It Out Fitness Studios.

TORONTO BUSINESS TIMES - February 2013 - 13

i n c on versa tion

Lorraine McLachlan: the franchise experience Association president and CEO preparing for The Franchise Show Feb. 23 and 24 at the Toronto Congress Centre

banks to franchise owners talking about what they are looking for. It’s a wonderful opportunity to really start to understand how a franchise might fit into your future plans.

: There are shows in Toronto, Montreal and Vancouver. What is unique about having a show in Toronto?

: In Toronto we do two shows because it is the largest market in Canada. One might think that with all the businesses that are already in place within the GTA that there is no more room but the reality is that the GTA keeps expanding and there is lots of opportunity.

ERIC Heino tbt@insidetoronto.com

mall businesses have grown into commercial empires and countless independent business people have found success due to utilizing franchising as a part of their business model. On Feb. 23 and 24 The Franchise Show is opening its doors to the public at the Toronto Congress Centre and is hosted by the Canadian Franchise Association (CFA). The CFA has been operating since 1967 and now has more than 550 members, which represent approximately 40,000 franchise locations in Canada. At the heart of the CFA is Lorraine McLachlan, President and CEO. Toronto Business Times had the opportunity to sit down with her and chat about the significance of franchising in Toronto.

‘I would say the fundamentals of franchising have remained consistent over time because the consistency of the customer experience is at the heart of franchising.’

: Tell us about the Canadian Franchise Association and what it does?

: What are the qualities of a business that indicate it has good potential to become a franchise?

: The Canadian Franchise Association represents many of Canada’s best-known brands and is the national voice of franchising in Canada. We work with governments to develop industry-made solutions, we promote excellence in franchising and we educate Canadians about franchising, specific franchise opportunities and proper due diligence.

: As president and CEO, what does your role entail on a daily basis?

: It is a very diverse role. I deal with the leadership and management of our association, working with our board of directors and on any given day I could be dealing with a government about advocacy matters, I could be working on some of the programs we offer like the Franchise Canada magazine or preparing for a franchise trade show. I could also be developing educational programs for our members.

: If I had a business that I wanted to franchise, what role could the CFA play?

: When a business wants to start using the franchise business model for expansion, the Canadian Franchise Association, through our various programs and services and through the services provided by our other members, can help a new franchisor understand best practices in franchising. They can learn from the experience of others and by becoming a CFA member and agreeing to our code of ethics they are moving towards stronger credibility as a franchise owner because they have put a line in the sand that says they want to be an excellent

Lorraine McLachlan is president and CEO of the Toronto-based Canadian Franchise Association.

‘People often assume that franchises are all about fast food but the reality is that of all our members, only about 40 per cent are in the food category, which means that 60 per cent of the opportunities are outside of food services.’ franchise owner and they are doing everything they can.

: Are there any particular legal requirements for a business to start franchising or can any business owner reach a point where they want to become a franchisor?

: We are not a law firm and can’t offer legal advice but the franchise business model can be open to any business that can be exactly replicated. For a business owner to start to franchise their business it is strongly recommended they get appropriate consulting advice because they need to develop things like operations manuals and a number of things along that line. They also need to get a good franchise-experienced lawyer to help them develop their disclosure documents and their franchise agreements, which are very specific to the franchise business model.

: If I wanted to become a franchisee, what steps should I take to begin to get involved?

franchisee and a franchisor?

: For someone who is interested in becoming a franchisee, the first thing they should do is check out CFA’s website at www.cfa.ca. There is a wealth of information there about franchising and about the due diligence process. We strongly recommend they read our bimonthly magazine, Franchise Canada, which carries a wealth of information and lots of stories about franchising. Also, they should attend The Franchise Show, which is in Toronto in February and October, in Montreal at the end of January and in Vancouver in the late fall. That is an opportunity, once they start to do research, to talk face-to-face with franchisors. Somebody wanting to become a franchisee needs to really acquaint themselves with a range of opportunities that are available and then strongly recommend reading the due diligence process on our website at www.cfa.ca and they should follow those steps.

: Can you quickly explain the difference between a

: The franchisor is the person or entity that owns the right to the brand and the operating system. They are the originator of the brand. The franchisee is the operator who is going to run a local location.

: Can you give me a brief overview of The Franchise Show that is happening in Toronto on February 23 and 24?

: It is the largest franchiseonly show in Canada. There will be approximately 100 exhibitors representing a wide range of opportunities. People often assume that franchises are all about fast food but the reality is that of all our members, only about 40 per cent are in the food category, which means that 60 per cent of the opportunities are outside of food services. By coming to The Franchise Show you can explore the range of opportunities that are available. There are a wealth of free seminars that are available that cover an incredible range of topics and range from legal advice to

: In order to use the franchise business model the operations of the business must be able to be exactly replicated. The hallmark of a franchise is that the consumer experience is consistent, regardless of whether a consumer visits a location in St. Johns, in Timmins or in Victoria, B.C. You have to, as a franchisor, be able to train your franchisee in how to deliver a consistent customer experience. If you have a business where you can do that then the franchise model is something you can consider.

: In your experience, how has franchising evolved recent years or has it essentially remained the same since the CFA began?

: Well I wasn’t here in 1967 but I would say the fundamentals of franchising have remained consistent over time because the consistency of the customer experience is at the heart of franchising. What is changing, and I think this is true for all business, is how businesses communicate with one another; how franchisors are able to communicate with their franchisees. Training, at one point in time, had to be delivered in person. There are ways now to deliver training and updates via webinars. The use of technology is morphing how businesses operate internally and I think franchises have kept up with that and are utilizing advancements that are available and it is to the betterment of the entire franchise system. n In Conversation is a monthly feature in the Toronto Business Times.

TORONTO BUSINESS TIMES - February 2013 - 15

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