Ask yourself these vital questions about your industry

By Samantha Garner | August 18, 2018

 

 

Every small business owner is part of a wider industry, and is affected by that industry to some degree. To help you determine the health of your industry, undertake research to gain answers to the following six industry health questions:

  • Is the industry growing?
  • Where are the opportunities in the industry?
  • Who are the key players in the industry?
  • Are there young, successful businesses in the industry?
  • What are the typical financial results for businesses in this industry?
  • How is new technology being used in the industry?

As a starting point, we recommend searching for secondary data sources using your NAICS code. Also known as the North American Industry Classification System, NAICS is used to classify companies, to collect, analyze and publish statistics, and to provide collective industry definitions across Canada, the United States, and Mexico.

Finding your NAICS code

To find which NAICS code matches your company’s industry, visit Statistics Canada’s website to figure out which sector, subsector, industry group and industry your business falls under. Here, you can either browse through industries or search for example activities that these businesses perform.

 

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How much does it cost to open a franchise?

By Samantha Garner | August 11, 2018

small business restaurant franchise

Franchisors often charge a franchise fee to be paid at the start of the agreement (either in full or as a percentage) as a deposit. You may have to sign a deposit agreement. The deposit may or may not be returned to you if you decide not to go through with 
the franchise.

For example, in Alberta, this deposit can be up to 20% of the initial franchise fee. However, once you’ve made the agreement, the initial franchise fee can vary from $5,000 to $75,000 — possibly more.

In Canada, the average initial franchise fee 
is $23,000, and covers costs like support, training, franchisee recruitment, grand opening, franchise development and site identification. Generally, this fee is higher the more recognized and established your franchisor company is.

Franchise royalties

Royalties are often due on a weekly or monthly basis to give the franchisor a portion of your sales. These can vary from 0–20% of gross sales, depending on the level of support and services you get from the franchisor. Some franchises don’t charge a royalty fee, but in these cases the cost is often built in through rebates or mark-ups on products or services.

Additional franchise costs

You may have to pay other costs, like advertising fees. Some franchisees have to contribute to an advertising fund for the franchise system as 
a whole. This means that fees from all locations can be pooled into a much larger budget.

You’ll also need an equity investment, which helps keep your franchise location going until you’re profitable. On average, this investment amounts to around $160,000 in Canada.

Other costs that you may run into could include research 
and development funds, leasehold improvements, furniture, fixtures, equipment, supplies and costs of employee training. Insurance costs are often included within the franchise agreement, but be sure you’re adequately insured before you open your doors.

How much do I need to pay to open a franchise?

In Canada, estimated overall costs to open a franchise can range anywhere from $50,000 or less for service franchises to as much as $500,000 or more for more sophisticated franchises. For more information, visit the Canadian Franchise Association‘s website.

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Small business blog posts we liked this week

By Samantha Garner | August 4, 2018

We hope you’re having a restful but also productive summer so far! Take some time to relax and unwind with these blog posts and small business articles we’ve recently enjoyed.

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What makes a strong value proposition?

By Samantha Garner | July 28, 2018

value proposition

A value proposition is a statement we use in business to summarize why a consumer (or business if your customers are other businesses) should buy your product or service. It’s an easy-to-understand statement that explains how a product solves a pain point, communicates the specifics of its added benefit and states the reason why it’s better than similar products on the market. The ideal value proposition is concise and appeals to a customer’s strongest decision-making drivers.

It should always be displayed on your website and in other consumer touch points, or marketing materials. It should also be intuitive and easily understood.

How to write a good value proposition

Value propositions can follow different formats, as long as they’re unique to your company and to your customers. Generally speaking, the value proposition is usually a block of text (a headline, sub-headline and one paragraph of text) with a visual (photo, hero shot, or graphics). There is no one right way to go about it, but we suggest you start with the following formula:

  • Headline. What is the end-benefit you’re offering, in one short sentence? You can mention the product and/or the customer. Build in an attention grabber.
  • Sub-headline or a two to three sentence paragraph. A specific explanation of what you do/offer, for whom and why is it useful.
  • Three bullet points. List the key benefits or features.
  • Visual. Images communicate much faster than words. Show the product, the hero shot or an image reinforcing your main message.

Evaluate your value proposition by checking whether it answers the questions below:

  • What product or service is your company selling?
  • What is the end benefit of using it?
  • Who is your target customer for this product or service?
  • What makes your offering unique and different?
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How can microfinance help entrepeneurs?

By Samantha Garner | July 21, 2018

microfinance-small-businessMicrofinance, sometimes called microcredit, means giving credit, savings, and general banking services to the millions of people who are unable to qualify for these services from a regular banking institution. Generally, this means a person lacking a certain amount of collateral – assets or money used to “secure” regular financing. Banking the “unbankable” is made possible with community-based approaches to lending because in general, banks are for people with money, not for people without (van Maanen, 2004).

We’ve all heard the saying “If you give a man a fish, you feed him for a day, but if you teach a man to fish, you feed him for the rest of his life.” That’s all well and good, but if the person in question has no fishing pole, those fishing skills aren’t much help. Microfinance can get that fishing pole. With microfinance, this person can catch more fish than they can eat. They can sell a few, pay you back for the pole, and become financially self-sufficient. Instead of being dependent on charity, they can become a contributing member of society who’s in control of their own life. That’s a win-win situation all around.

A microcredit loan may range from fewer than $100 to perhaps a few thousand dollars, depending on the situation. These loans also benefit the creditor – they’re a manageable amount for the client, and easier to pay back than a regular, large loan. These microloans tend to have an extremely high success rate when it comes to being being paid back, and several organizations providing these loans report a success rate around 97%.

The concept of microfinance began as an alternative way to assist developing countries. The concept is nothing new; the term “microfinance” became a buzzword in the 1970s and has been slowly developing and evolving for decades, but the positive impact of this service isn’t limited to the developing world. There are plenty of “unbankables” right here in Canada – people who have valuable skills and fantastic ideas, but who are trapped by their financial situation. At GoForth Institute, we believe that to build a nation of successful entrepreneurs, they need access to three things:

  1. Entrepreneurship education
  2. Mentorship, advice, counselling and support
  3. Access to microfinance and loans

Microfinance can mean the difference between being dependent on aid, and being self-sufficient. It can mean the difference between small business failure, and entrepreneurial freedom. It can be the differentiating factor – the tipping point – between the world as we know it now, and the world as it could be, if every person’s skills, drive and potential had the opportunity to flourish.

Want to read more?

Kiva, which facilitates the crowdfunding of small business microloans in increments of $25 or more

Microfinance and education- real people and a real impact at Huffington Post

How the ‘world’s bank’ can create the next billion entrepreneurs at Wired

Microfinance comes of age at INSEAD Knowledge

 

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