Starting Heaven Fresh Branch in China

We've all heard of the booming Chinese economy, and it is every multinational company's dream to get a piece of the Chinese market. 

When I visited China last April, there were two things that surprised me the most.  First of all I did not need an interpreter.  Almost anywhere I went, there was someone who spoke English. All the teenagers have been learning English in schools from very early age and are able to communicate in English.   Then the 2nd thing that surprised me was the fact that Chinese malls were filled with expensive merchandise and were jam packed with buyers who had no trouble spending money buying those costly products.  This was contrary to my imagination of all the Chinese shops  crammed with "cheap Chinese goods".

Naturally, I started thinking if there was an opportunity for Heaven Fresh to sell air and water purifiers in China.  I searched for the  answer by talking to random people on the street.  Almost every one complained about the pollution and the need for clean air.  I also visited a young Chinese couple with a new born baby. During our conversation, when I mentioned that we are in the business of marketing air purifiers, the wife quickly brought in a thick magazine featuring baby products. Apparently, she had thoroughly studied all the products so she quickly flipped to the page that listed air purifiers.  She complained about her husband smoking at home and told me that she has been thinking about buying the air purifier as she was concerned about the baby suffering from the cigarette smoke. 

I had my answer to the opportunity in China for Heaven Fresh. There are more than 15 millions babies born in China every year.  All that Heaven Fresh needs is to target the educated and working mothers like the one that I met and get 2 thousand of them to buy air purifiers to sustain our Chinese office. 

Our Strategy

Being a Micro-Multinational and working with very limited capital, our utmost priority will be to break even in China in first few month.  To minimize our startup expenses, we will need someone with entrepreneurial spirit to manage the Chinese office. Someone who's willing to give whatever it takes to get the job done by wearing multiple hats and the eagerness to learn all the aspects of the business.  Among many people whom I met in China, I was particularly impressed by one young Chinese guy who I believe will be a perfect candidate to manage the Heaven Fresh China office.

As usual, our plan of action in China includes online sales, a reseller network of small businesses and distribution through large nationwide chains. Majority of the startup capital is raised by the existing company investors.  Our products are already manufactured in China and our preference is to get the factory become a Heaven Fresh partner in local distribution and marketing as well. 

If you are reading this post and feel that you can bring a significant value to the Heaven Fresh China venture, we would love to hear from  you and possibly work with you.

Personal Time with Investors - Part 2

The first investment for Heaven Fresh came from 5 people that included friends and family.  I became friends with Anny Firman, Kamal Anwar and Taoufik Lahrache while attending Illinois Institute Technology in Chicago for my undergraduate studies in Computer Engineering.  The first investor to invest significant amount of money in the company outside the immediate friends/family circle was Mr. Azam Gondal.

Getting Mr. Gondal to invest money in the company was quite an experience.  He was very keen on investing the money in the business yet needed more confidence that we could manage the money and the business.  Our negotiations with him for the investment did not panout at two different occasion.  We understood his concerns and even though he was not a partner yet, we kept him informed about the progress of the company.  Finally, he decided to join in at the end of 2003.  This investment was a real boost to the company and gave Heaven Fresh much needed capital to put the business on the growth path. 

Getting someone to invest in your business means bonding with them on a very personal level regardless of the size of the investment.  In my opinion, the sacrifices that an entrepreneur is willing to make to establish the business are the biggest proof to an investor that his/her money is in responsible hands.  Anny, Taoufik, Kamal and I were involved in day to day business and had known each other for long time thus had an inherent trust in each other. The investment from the family side was more for the sake of helping us out than with an expectation of a return.  This outside investment from an experienced businessman like Mr. Gondal was a real confidence booster and a genuine seal of approval that we were on the right track.

Mr. Gondal and I took a trip to China in April 2007 to attend the Canton Fair in Guangzhou.  Here are a few pictures.

	Mr. Gondal at Dubai International air port during our transit to China.
	I was there at the airport with him :)
	A picture in front of the old exhibition center (Liuhua complex) in Guangzhou, China.
	A banner mentioning 'The 1o1st session of China import and export fair".
	Mr. Gondal outside the new exhibition center (Pazhou Complex).
	The construction cranes in a background are working on the extension of the Pazhou complex.

Personal time with the Investors

I went to see Mr. John Brouwer in Alliston Ontario last week. John is one of the Heaven Fresh investors. Spending time with the company investors on a one on one basis is part of my routine to bond with the company investors. Personal time with the investors gives me a chance to learn how they view the company progress and gauge their expectations.  This is also a perfect opportunity for me to determine their level of satisfaction with the growth and get them on the same page about on going or planned business expansion activities.  After all, existing investors are the best candidates to finance the further growth of the business. 

A day in the Canadian countryside was also a wonderful break for me from the daily office routine and the fast pace of Toronto.  John took me for a ride in his four seater Cessna. I really had a blast flying just above the clouds on a clear sunny day.  This was my first time flying in a small plane sitting right next to the pilot :).  Well, technically not the first time . It was when I went for sky diving jump in the suburbs of Chicago.  Here are few of the pictures of our Cessna flight taken with my phone camera.

	How could I miss an opportunity to take a picture with the air plane :)
	I'm in the cockpit while John's out filling up the fuel
	A view of John's farm house while we are taking off. My car is parked next to John's truck in the driveway.
	An aerial view of Alliston, Ontario with Honda plant in the view.
	For all of you who need proof that we actually flew. I am in the plane while we are up in the air :)
	John with the airplane after a successful landing and parking the plane.
	John and Monica in their beautifully maintained 5 acre backyard.  I ate all the delicious cookies that Monica baked.  Hopefully, they will invite me again :)

Micro-Multinational Talent Acquisition - Part 2

One of the criteria that makes a small business a micr0-multinational is the fact that the company has employees in multiple countries.  One obvious reason for Heaven Fresh to have employees in several countries is that the company is selling products in many countries. Although we do not market products in Pakistan yet, we do have employees there.  In our experience, there is no better way to bootstrap a startup company than to have talented employees in emerging countries.  By doing so, companies based in countries with higher labor cost can achieve the desired output at the fraction of the cost of hiring  local employees.  For example, the following daily business functions of the various Heaven Fresh offices are performed by its employees in Pakistan:

• Daily order processing
• Labels and packing slips printing
• Bookkeeping
• E-mail customer servicing
• E-bay listings and processing
• Developing & Maintaining web sites
• Graphic Designing

 I believe that for a young startup company, hiring talented employees in developing countries can help accelerate the company's growth by leaps and bounds.  However, working with employees who are thousands of miles away has its own challenges, especially for a small business without proper software and communication tools. The time difference plus the cultural and language differences do not make it easy either. It's a process where a company must determine the proper split of responsibilities, have the infrastructure in place to coordinate the tasks,  manage communication, understand the cultural differences and most of all develop a strict work discipline among this geographically scattered team.

 Outsourcing of various job functions to countries like India, Russia, China, Philippine etc. has been a big part of fortune 500 companies for last 15 years. However, small companies are just starting to catch up on this trend thus increasing the total count of micro-multinationals. One of the reasons for slow movement of small businesses in this arena is the lack of proper software tools and communication channels for the coordination of various tasks among team members.  A vast majority of the micro-multinationals today are high-tech companies whose employees/partners have extensive technical background and are able to put various pieces of software together to enable them to work remotely in a coherent way.  Unfortunately, most of the small businesses do not have the luxury of technical know-how or have the financial muscle to buy expensive software platform to be able to hire employees half way around the globe.

I believe that the number of micro-multinationals with employees in various countries will sky rocket in coming years thus making it a de facto standard for any small business to be competitive.

Talent acquisition for Micro-Multinational

Yesterday, I started reading a book called "The Art of The Start" by Guy Kawasaki. Mr. Kawasaki is the Managing director of a venture capital firm, Garage Technology Ventures.  The book is a must read for every entrepreneur.   In this book, an entire chapter is dedicated to "The Art of Bootstrapping" for a young company where he presents ideas about getting things done with very little money. One of his advice is to "Forget the 'proven' team".  Look for raw talent instead, simply because the proven and experienced people will be expensive.  He is suggesting to focus on "affordability - that is, inexperienced young people with bushels of raw talent and energy."

This is a great advice and I can relate to it as the young raw talent is playing a very important role in the vibrant growth of  Heaven Fresh - a micro-multinational.  However, we simply cannot discount the value of experience,  especially if it is available at minimal or no up front cost.  For example, there are plenty of retired people who will be willing to help out a young company to keep themselves busy and also to make a few extra bucks. Since most of those retired folks already have some sort of retirement income, they will not demand any big compensation in advance. Their experience and devotion can play a pivotal role in the growth of a young company.   For instance, Mr. Roy Frankel was 79 when he started working with Heaven Fresh 3 years ago when the company was less than a year old. I still remember his words during our 2nd meeting that "you need me but you cannot afford me".  So we established a compensation structure that was based on the sales.  With no up front payment, there was  nothing to lose but every thing to gain. I have no doubt in my mind that what Roy did for Heaven Fresh could not have been achieved by a young gun in a thousand years. All the credit goes to Mr. Frankel that Heaven Fresh air purification products are selling in Shoppers Drug Mart (Pharmacy chain with around 1000 outlets across Canada) www.shoppersdrugmart.ca , Canadian Tire (Largest Canadian retail chain with 450+ mega stores) www.canadiantire.ca, PharmaSave (www.pharmasaveteen.com), Rexall Pharmacies (www.rexall.ca),  The Shopping Channel (www.theshoppingchannel.com) and Nutrition House (www.nutritionhouse.com).   Due to Roy's perseverance we are very close to getting Heaven Fresh products in the Home Depot Canada (www.homedepot.ca).  Besides his undisputed salesmanship, his advice and wisdom in various business matters is priceless for us. 

My own father has also been helping us with the UAE Heaven Fresh office. The inception and the success of the UAE office would have been extremely difficult, if not impossible, without his unconditional dedication at zero monetary compensation. My father has been an immense support for me and all my siblings his entire life. It can be argued that even after retirement his commitment to my career is part of being a great father.  However, the fact remains that it would have been impossible for him to play this crucial role in the success of the UAE office if he did not have decades of management experience. In nutshell, if the business can "afford" it, experience will play an extremely valuable role for a cash strapped micro-multinational .

Home Page Bounce Rate for Heaven Fresh

Heaven Fresh being a micro multinational, its web site sales have been the life line for every new office.  We launched http://www.heavenfresh.com in March of 2003 and kept adding content to it on incremental basis.  Subsequent web sites for Canada, Germany and the UK were simply a replica of the first one.  I have been told numerous times that our web sites are little too "busy", or in other words cluttered.   I personally have been somewhat reluctant to give a quick facelift to the web sites,  thinking that we might lose our positioning in the search engines.  Anytime someone suggested that the visitors might find our web sites confusing, my answer has been that I much rather have the sites found and get the visitors frustrated than put up nice web sites and not be found by the visitors.  After all each one of the web sites topped the search engines for various related keywords and all of them generate good business, enough to sustain a new office.

I really believed that we should not mess with our web sites as long as they are producing good sales until I saw the bounce rate on the newly designed interface of Google Analytics.  Our average bounce rate is around 60%, meaning that many visitors leave the home page very quickly without looking around any further. Sixty percent bounce rate is a scary number.

A total revamp of the web sites is already under way. However, I wish that we would have done it earlier. As a result of redesigning the web sites, even if we lose some traffic it will not make much difference since more than half the visitors leave the homepage within few seconds anyway.  According to Avinash Kaushik,  Analytics Evangelist for Google, "it is really hard to get a bounce rate under 20%, anything over 35% is cause for concern, 50% (above) is worrying". Here are some good tips on his blog.

A brand new Heaven Fresh Canada web site will be up and running by the end of August 2007.  My goal is to strike a balance between the site's visibility in natural search and a desirable bounce rate.

Heaven Fresh Infomercial & TV Marketing

Shaper Image has been broadcasting a very high-rated TV infomercial campaign in the United States for its Ionic Breeze air purifiers for quite long time now. Other companies like Ionic Pro and Oreck are also airing TV infomercials in the US for their indoor air purifiers.

Having started the business in March 2003 and being a small player in the air purification industry, we only had a wishful thinking on our part to have the Heaven Fresh infomercial running on TV. TV infomercial marketing is an expensive and risky undertaking for any company, let alone for a cash strapped small business. There are just too many variables that can be the reason for the failure of the infomercial campaign. We had a breakthrough when The Shopping Channel (http://www.theshoppingchannel.com) Canada decided to carry the Heaven Fresh products. The first show aired in January of 2005 and Heaven Fresh products have been enjoying a successful ride on TSC since then.

When Oreck started the TV campaign in Canada, our home base market, it left us no choice but to get serious about producing our own infomercial if we were to make Heaven Fresh a recognizable household name in air purification business. Although, more than a year of successful TSC run had really boosted our confidence to go for producing and televising of our own infomercial, the TV production and broadcasting were still an unfamiliar territory for us. We needed the qualified and experienced people to help us mitigate the risks of TV sales/marketing. Mainly there were following three areas of concern:

1) Financing for media and inventory

2) Television production

3) TV marketing management (Air time & TV selection, order handling, logistics, sales analysis, negotiations and coordination etc.)

We believed that the best way to move forward on the TV marketing campaign was to find partners and stakeholders in the project ,who would have a vested interest in it and take its success and failure as a very personal matter.

For financing, there was no better choice than to get our supplier, Surround Air (http://www.surroundair.com), support the project. By having Surround Air as a partner in infomercial, we not only reduced our financial risks but also got our supplier intimately involved in the entire TV marketing process. At the very beginning of the project, we got a million dollar advice from the president of Surround Air, Mr. Casey Fisher, not to go for production houses that offer bundled deals to produce and air the infomercial. Therefore we needed to maintain a deep involvement every step of the way in the production and broadcasting process. This included, script writing, hosts selection, equipment , filming, studio setup, animation, testimonials, topic experts, media selection, media editing, TV/air time slots selection, call center choice, regulatory approvals and so on .

A quality video production is one of the keys to have a successful campaign. Having worked with Alive Pro Studios (http://www.aliveprostudios.com) for some time for all of the Heaven Fresh graphics needs we knew their passion for the video production and we had faith in their ability to do quality work. Yet, we wanted them not to treat the Heaven Fresh infomercial just like any other project that they needed to finish. But instead make every decision in the Heaven Fresh infomercial production process by having the ultimate goal in mind which is to maximize the impulsive sales when people watch it on TV. Well, what better way to get Heaven Fresh project very near and dear to Alive Pro Studios than to get them to invest in the project and make them a partner in the profits. So, it was done and we had one more investor, stakeholder and partner in the Heaven Fresh TV sales.

A company can have the best video production and all the financing that it needs, but the success of an infomercial hinges on getting the right message to the right audience, selection of the TV channels and air time slots, logistics coordination, calls management, sales data analysis and several other factors. We had to have someone, who lives and breaths "marketing",  intimately involved in the TV campaign. For that we could not think of a better person than Jim Pappas of Future Management Systems (http://www.designyourbiz.com). Jim is a marketing guru and he has greatly helped Heaven Fresh with various marketing and management tasks from almost the very beginning. An experienced marketer and a very creative individual with vast management experience, Jim was the perfect partner to manage the Heaven Fresh TV infomercial campaign, only if we could convince him to invest months of his time in it for a share in the profits. Jim definitely saw the value in the project and thus became another investor, stakeholder and partner.

Every one involved in the project has given their utmost best for its success. We do not see anything that we could have done any different. Only time will tell whether the team's best efforts were good enough to achieve the desired results. But one thing is certain that every one involved is determined to make it work and they will keep doing whatever it takes until we accomplish our goal.

I have to finish this post by saying that when we started the project, the infomercial seemed like a big gamble for Heaven Fresh. We did all we could to get the odds in our favor. Coincidently, the campaign launches on 7/7/7 (July 7, 2007) at Shop TV (http/www.shoptvcanada.com) in Canada. Maybe our big gamble is about to pay off and we are going to hit the jackpot :)

Wikinomics & Micro Multinationals

“Staying globally competitive means monitoring business internationally and tapping a much larger global talent pool”

“We must collaborate or perish – across borders, cultures, disciplines, and firms, and increasingly with masses of people at one time.”

“[I]t pays to have global capabilities including truly global workforce, unified global process and a global IT platform to enhance collaboration.”

Don Tapscott and Anthony Williams are absolutely correct to make the above statements in their book Wikinomics. However, it is easier said than done when running one of the small businesses that make up 90% or more of any country’s economy. Thinking globally is great, but a small business requires the infrastructure, know how, relationships, understanding of cultures and the local market needs to act globally in this era of borderless economy. Given the limited resources of a small business, it is not just difficult but next to impossible for a small business to be “truly global” with the tools, technologies and business management software of year 2007.

Don and Anthony themselves mention in their book that “Something much bigger and bolder is required to master today’s realities”.

Having established Heaven Fresh offices and distribution centers in the United States, Canada, Germany, United Kingdom, United Arab Emirates, Saudi Arabia and Pakistan, we are extremely well aware of the excruciating pains of acting global with limited resources and inadequate financing.

Even in this Internet Era of 21^st century all small business are caught in a catch 22 situation; invest in business management software and consultants first that would help them expand by becoming more efficient, global and profitable, or first grow the business to a much higher sales level to justify good integrated business management platforms as well as expensive consultants with international perspective.

All of today’s businesses belong to one of the two categories. They either get the pieces of software for low cost/free and put them together or buy an expensive comprehensive package and hire expensive consultants to customize it. A small or medium sized business neither has the time to go for the former nor has the budget to opt for the later.

According to Don and Anthony in Wikinomics, “Today’s most exciting and successful web companies are stitching together their own services from shared databases and lego-style pieces of web software.”

This is true because even the most comprehensive business software packages do not have the necessary intelligence built into them to conquer today’s challenges. First of all, not every business has the luxury of having the know how of putting the pieces together. Secondly, if a viable solution of a latest business problem has already been developed then a business owner/manager should not have to re-invent the wheel thus taking focus off his/her core business or have to pay an arm and a leg to take advantage of a cutting edge solution. There must be a simple, easy and cost effective way for one business (consumer) to find and use the latest solution in an integrated fashion without devoting unnecessary precious resources. It should be equally hassle free for another business (producer) to share their solution with the rest of world and even profiting from their efforts.

Don and Anthony sum it up very nicely, “The companies that figure out to harness the power of open platforms while providing adequate incentives to all stakeholders are poised to reap great rewards.”

A business management software based on the collaboration and affordability is needed to help companies get organized, streamline processes, collaborate globally and grow rapidly so that ‘a new era of online “micro business” could be born’. An era of Micro-Multinationals.