Sunday, March 28, 2010

Moving to Wordpress

Since Google is discontinuing Blogger FTP support, I have decided to move to WordPress. Also, taking this opportunity to move to a different domain name so that other entrepreneurs can also share their experiences of running micro-multinationals. Please visit the new site at (http://www.micromultinational.org).

Sunday, September 13, 2009

BCM50 and IP Telephony for Remote Offices

I have spent past few weeks figuring out how to extend the Nortel BCM50 telephone extensions to the Heaven Fresh remote offices by spending the least amount of money. My inner computer geek is forcing me to write this post as the only information I could find on this topic is from the companies eager to sell you expensive switches and their “expertise” for hundreds of dollars per hour.

In an effort to cut the payroll costs, we decided to move the phone customer support to our Pakistan office. It meant that we needed to install some telephone extensions there via the Internet so that the offshore staff could pass the calls back and forth to the US and the Canadian offices.  We knew that the Nortel BCM50 PBX that we bought from Bell Canada about a year ago had the capability to support both the traditional and the IP telephony. Naturally, we called Bell to help us with the project. Bell was happy to do it but wanted $5000 for something that we finally got done in just $500. It involved buying refurbished IP phones (Nortel IP2004) and the cheapest LinkSys VPN routers (WRV210 / WRV200). Once the VPN was setup between the remote offices and the Canada office, it was just a matter of plugging in the IP telephone sets into the network ports. Voilà, the Nortel IP phones automatically found the BCM50 in the Canada office and the Heaven Fresh was one step further in becoming the true Micro-Multinational. Following is the diagram of our telephone network:

BCM50_network

Note: My wife wants me to let every one know the she drew this diagram for me. As you can see, she is good with Photoshop :)

Advice: If you are buying the Nortel BCM (Business Communication Manager), don’t go for the “Standard Bundle” offered by most of the resellers. Just get the licenses for IP seats unless you have a specific reason to go with regular digital telephone. This will save you the money for installing separate phone jacks plus you will have the flexibility to use the IP phones within and away from the office.

Sunday, July 26, 2009

Heaven Fresh China – The beginning

We are launching a pilot project to sell Heaven Fresh products in China. The initial plan is to test the market by launching an e-commerce Chinese website for Heaven Fresh

The potential for any business in China is not a secret but presumably it is one of the most complicated consumer market in the world. Our strategy is to work with a local partner and concentrate on e-commerce in the beginning.  Given all the experiences we’ve had of opening various international offices, only one quarter’s data of online sales will be enough to get a feel for the future business.

Being a micro-multinational, we have learned to keeping the business afloat with an extremely small foot print. The real challenge will be in setting up the nation wide distribution network in China. According to our research, there is a potential to do more business just in the metropolitan area of Shanghai than we do in entire Canada. As part of our plan, we will try to nail Shanghai down before we move on to the other areas of the country.

We are quite thrilled about setting up the shop in China as it will be an exciting challenge to navigate a totally unfamiliar territory in the months ahead.

Saturday, June 20, 2009

Promotion with Costco.ca

We participated in a special 3-weeks discount promotion with Costco.ca in the month of April to sell our HF-380 air purifier.  Heaven Fresh is a drop ship vendor for Costco.ca, which means that Costco.ca only takes orders online and Heaven Fresh ships directly to the customer on behalf of Costco.  Normally when  drop-ship vendors take part in a promotion, Costco requires the  vendors to have certain level of  inventory sitting in their warehouses to cover the orders from the promotion.

Our decision to join in the Costco promotion might sound like a no brainer but given the tight cash flow situation there was quite a bit of a risk involved for us to order large inventory  as the Costco buyer had given us an estimate of anywhere between 100  to 500 units. So we had to have three additional containers sitting in our warehouse above and beyond our regular stock. The catch is that Costco’s estimate of sales during the promotion is just an estimate, not a guarantee for sale. Vendors not only chip-in money to advertise in the promotional catalog but also assume 100% of the risk of stocking the inventory for the promotion. If the promotion is not successful for any reason, vendor’s cash gets stuck in the inventory. We were somewhat reluctant as we had been burned in a similar situation with The Shopping Channel before. To cut the long story short, we went ahead with the promotion as we really needed accelerated selling to balance our books before the start of slow summer months but knowing very well that a bad outcome would put us in a extremely precarious situation.   The promotion went well and was a massive help in easing the cash flow.

The interesting new phenomenon for me is that many of the American retailers are separating their e-commerce ventures from their brick and mortar operations. For example, the buyers for both sides of the business are different.  The products that consumers can buy online are not necessarily available in the stores or vice versa.  An independent e-commerce operation is allowing them to use their brand recognition just for selling while shifting the logistics to the vendors. Canadian retailers have not jumped on that bandwagon yet and the British retailers are partially on board. However, I believe that this trend will continue to grow creating opportunities for small vendors as well as fanning the growth of more micr0-multinational distribution companies.

Tuesday, May 12, 2009

New Arrivals – Baby boy and BMW 745 Li

I haven’t been able to write  a post for so long. Life has been quite busy lately both at work and at home.  There have been significant new development at both ends. My wife and I had a baby boy, Rayan Bashir,  on April 20, 2009.  He was born a week earlier than the due date. He had breathing difficulty at birth due to some fluid in his lungs and was kept in in ICU for one week. Although doctors tried to assure us that it was very common with new born babies but still it was very stressful to see him struggle with each breath. He is doing fine now and is diligently performing his duties of keeping us awake every night.

I also bought a BMW 745 Li yesterday. Had no such plans until two days ago but a friend of mine got me into test driving it. Ten minutes later the deal was done and now I am a dad with a BMW.

What does it all have to do with a micro-multinational? Well, not much except that I have to work even harder to pay off my new car and keep up with the supply of diapers for my boy.

Wednesday, January 21, 2009

A very sad day for Heaven Fresh

We got the shock of our life this morning (January 21, 09) to get the news that Mr. Roy Frankel had passed away.  Roy was 83 years young.  The old adage that 'age is just a number' was coined just for Roy.  Sometimes I wonder that if I get to live for another 50 years, will my vibrancy be even close to what Roy had.

If luck has some role to play in building a successful business then I can say without any hesitation that crossing paths with Roy in the early days of Heaven Fresh was the luckiest break for us. In response to one of our ads in Toronto Star, Roy walked into our office looking for an air purifier.  After talking to us for few minutes, Roy's experienced eyes saw something that we could not.  When I told him that we wanted to make Heaven Fresh a household brand name, his response was that 'I know what you need but you cannot afford me'.

I don't know whether it was his desire to give back to the society or his yearning to stay in the game that he offered to work with us for free. It was an offer that no one in their right mind could refuse. Roy lead us on a path that we did not even know existed. He introduced Heaven Fresh to all the major Canadian retailers. It is the hard work and dedication of Roy that Heaven Fresh products got into the Canadian Tire, Shoppers Drug Mart, Nutrition House, The Shopping Channel, PharmaPlus, Costco and several other chain stores.

Roy had this amazing level of energy and passion for growth. He was like an energizer bunny that did not know how to stop. Even until yesterday he was concerned about all the pending e-mails and wanted to make sure that we had sent the necessary information to Costco for the upcoming promotion. He wasn't feeling well for past few days but I knew that he will be up and running soon as he always did. Anytime he got sick, he bounced back with even more vigor. It was just Roy.

That's why it's so hard to believe that he's not among us anymore.  It makes me sad to think that I will not get another call from Roy early in the morning with some "urgent" matter.  Heaven Fresh will miss him very much. I will miss him very much.

May his soul rest in peace.

roy

Tuesday, January 6, 2009

Recession and the Micro Multinational

Good Bye 2008.  What a year it was. Every single business move that we made since starting Heaven Fresh in 2003 was put to test in 2008.  With no prior experience of managing a business in an economic downturn,  recession was just an abstract in my mind until recently.  I remember thinking to myself in early 2008 that we must be really good that the so called recession hasn't made any difference to the Heaven Fresh sales.  Then we entered the summer season of 2008 with an expectation of usual low sales volume.  Somehow I managed to comfort myself that as always we would break even in the summer months and would recover from the slow season in September. When I got back from the Middle East office by the end of August, I found out that  our credit cards and credit lines were all maxed out trying to keep up with salaries and operational expenses.

All of a sudden it hit me that perhaps recession was not some made up story by the news channels and business magazines. It was real and needed to be dealt with. By using my old fashioned calculator and the latest snapshot of our P&L reports, it did not take me long to discover that even if we achieved our "normal" sales level in last four months of 2008, we would not be able to get out of the operational debt accumulated over the summer months.  By the end of September 08, it was painfully obvious that our "high season" was not going to be as high and we had to do something about it.  Right around that time, my dear trader friend, Celal Okur, forwarded me this presentation by Sequoia Capital.

Out of this lengthy presentation, the following three slides got imprinted in my mind. We had to save our young company from getting into the "Death Spiral" of the 2008 recession.

   death_spiral

survival

solution

Well, we took the solutions presented by Sequoia to heart and made some instantaneous moves based on the suggested solution. Some of them were:

  • Cut the management bonus installments
  • Cut the base salaries of the sales staff
  • Eliminated the marketing expenses that did not produce immediate results
  • Stopped the R&D project and laid off the staff
  • Moved the UK office from London to Birmingham to save on rent (a massive saving for operation our size)
  • Held back the payable invoices, where ever we could
  • Diverted resources to high margin online cash sales
  • Expanded the offshore staff to reduce payroll expenses

As a result of the above steps, we managed to turn cash-flow positive in November and December 08.  As of today (January 06, 09), uncertainty is not over yet. The recession fears still loom and economy is still sliding.  However,  I feel more confident that we are going to get through this rough economic patch. We have also devised a plan to expand sales without increasing overheads. 

As the survival instincts kicked in due to the deteriorating business conditions, our operation in multiple countries and our small size gave us the flexibility to shift resources back and forth very quickly on as needed basis. Thus being micro-multinational became a saving grace. Once the economic chaos is over, this recession might turn out to be the biggest lesson for me on how to steer the ship in choppy waters.

Tuesday, December 9, 2008

Trip to Dubai. Biz in the Middle East.

Although we started our Middle East branch 3 years ago,  I have not had a chance to visit there for an extended period of time.   Heaven Fresh sales have been growing steadily in the Middle East and we believe that it is the time for us to make a bigger move in that part of the world especially with all the uncertainty due to the financial turmoil in the North American and the European markets.

I took a 6 week long trip to Dubai in July/August to see the reality on the ground.  It was definitely a productive trip except that being outside in the blazing sun even for a little while was enough to give anyone a heatstroke.  So the first lesson that I learned was that July and August are not the best months to be in the Dubai.

There is an amazing construction boom in Dubai. The enormity of the construction projects can be judged from the fact that one quarter of the world's tall cranes are mounted in Dubai. Credit is very abundant and billions of dollars of investment are pouring into Dubai. The rulers of Dubai have turned this little city into Las Vegas of the Middle East and South East Asia. However, it's not just an entertainment center, it has also become a hub for transit trade. Ninety fiver percent of the imports into Dubai are re-exported to the rest of the Middle East, Africa, South East Asia and Central Russian states. This status of a 'central bazaar' is fueling the growth of UAE like a snowball now.

This rapid growth is also creating problems for the region, for example, infrastructure problems, high inflation and social issues among the local population that is in minority now.

From a micro-multinational perspective, I feel that we were lucky to get started there 3 years ago.  The cost of living there has gone up so high that we could not have established the office there today without investing 3 to 4 times as much money as we did 3 years ago.  One of the most fascinating things for me is that our online business is picking up there.

During my trip, I got a chance to meet with many business people and thoroughly study the market.  Based on my research, I strongly believe that a significant future growth of Heaven Fresh is going to come from the Middle East Business. Besides an abundance of petroleum cash, infrastructure projects initiated by many of the GCC governments are fueling the local economy.  On top of that, having a business presence in Dubai makes it relatively easy (and safe) to get a piece of the Iraqi reconstruction. I also met quite a few Canadians this time who are working in Dubai in various fields. I strongly suggest that any business thinking to expand outside of Canada and the US must look into setting up a base in the Middle East.

Sunday, July 6, 2008

Micro Multinationals in Business Week

There is an article on micro-multinationals in this week's Business Week.  It can be seen on their web site by clicking here.  The micro-multinational trend is to stay here and the number of such companies will continue to grow. Based on my personal experiences, I strongly believe that the small business world is in a dire need of a web based business management software platform designed for a small business to go international.

The software platform has to have certain fundamental attributes for a mass adoption by the small businesses around the globe. 

1) Such a platform will be complex by nature so there have to be millions of service providers ready to help business with this platform.

2) For this kind of mass acceptance both by the micr0-multinationals and service providers alike, it has to be relatively affordable for any size of business. The only way I see it happening is if the business is charged based on the business activity or pay-per-transaction (a transaction can be defined many different ways).

3) The software platform also has to be open so that it can keep up with the pace of change in today's business world.  One company cannot hire enough programmers to incorporate all the needed functionality. So, millions of developers must have an incentive to give their best to this open platform.  An open-source package without any heavy-weight companies behind it does not cut it because the modifications/add-ons to the platform have to be regulated by a central authority for it to work in a uniform way.

Every functionality or business model that such a platform needs is already out there so I am not necessarily talking about new features here, it's just that existing stuff has to be combined in a new package with a right philosophy. The fundamental reasons for the success of QuickBooks, Linux, Apache ,Google Adwords,  Microsoft Windows and SAP have to be analyzed and cooked in one pan to come up with a perfect mixture for micro-multinational business software platform.

Everyday, I come back home from work with an ever increasing passionate desire to have the resources and support available to be able to create such a platform.  For quite some time, I have thought about going to VCs to get seed funding for this idea. At other times, I wish that a company like Google or Microsoft can introduce such a thing which will be a tremendous help in taking the Heaven Fresh to the next level. But perhaps, a consortium is needed to pull off an ambitious project like this one.

Monday, June 9, 2008

Online Business in the Middle East

When we opened our office in the United Arab Emirates, we were warned by many people about the difficulties of doing business in the Middle East. We were particularly concerned about the fact that Internet shopping was not big there which is a vital part of our startup strategy.

It took the longest time out of all of our international branches to reach the break even point in the Middle East.  However, after three years I can say that Internet has played a significant role in our growth there. We get a decent number of orders in UAE (Dubai, Abu Dhabi, Sharjah etc.) through our web site.  The use of credit cards for online sales is still almost non existent, therefore we ship all the orders COD (cash on delivery).  Although a few customers have placed orders on the web using online shopping cart, a vast majority bargains and places order over the phone.

As of today majority of our revenues are realized from sales in Saudi Arabia.  Saudi Arabia is the richest but the most difficult market to penetrate in the Middle East. The key to success there is to find a good partner to work with. It was a very risky bet for us to invest in Saudi Arabia, but it is starting to pay off now. We have recently signed a distribution agreement with a well established Saudi group.  Sales have been growing steadily for past year or so but we are hoping that they will sky rocket working hand in hand with our new partner there.

We are planning to expand into other Middle Eastern countries within a year or so and Online marketing will be a major piece of that expansion strategy.