Thursday, May 1, 2008

Hiring Employees for a Micro MNC

Before starting Heaven Fresh,  I worked for various companies and during my job hunting process I always wondered about the reasons for the existence of head hunters.  My thinking was that there was no justification for an employer to pay to an employment agency just to get a resume forwarded especially when the employer could get resumes directly from the candidates. Probably I developed this thought process simply because I was always able to find jobs by sending my resume directly to the employers.

Having been on the other side of the table for past 5 years, I can say that finding right people to work for your organization is probably the most difficult and challenging task.   When we first contacted a head hunting company, I was quite astonished to find out that they charge around 20% of the hired person's salary which meant that if we hired someone for $40,000 / year, we would pay $8,000 in fees to the head hunter.  However, scanning resumes, calling candidates and interviewing them is such a lengthy and tiring process that not only head hunting companies start making perfect sense but also their fees sound very justified.

The process of hiring people is particularly difficult for a micro-multinational because of the preference to find people who can wear multiple hats and can handle variety of responsibilities. We have been looking for a bilingual person who can speak fluent English and French to help us with marketing and sales along with alleviating some of the burden of incoming customer phone calls in the Canada office.  We have not been able to find the right person yet and seeking help from a head hunter is getting more and more tempting but then again, the money that we will pay to a head hunter can cover the compensation of an employee for two months.

I feel lucky to have found very talented and responsible people to work with  just by coincidence . But I guess the lucky streak has to end somewhere and now we have a decision to make whether to bite the bullet and pay the fee to a head hunter or to ease our search criteria. We will see who wins, cash strapped bank account that need preservation for slow summer season or already stretched resources desperately in need of having some additional help on board as soon as possible.

Labels:

Sunday, April 27, 2008

DRTV - Mistakes made & Lessons Learned

When we started the infomercial projects, my personal objective was to observe the entire process from a close distance.  We knew from our research that a successful direct response television (DRTV) campaign would require a perfect execution of video production, logistics and broadcasting.  We were also well aware that it would be a miracle to hit a home run on the first shot. While hoping for the best, the game plan from the very beginning  was to  minimize the risks as much as possible.   We were focusing on gaining the first hand knowledge of  all the pit falls of the direct response marketing while avoiding any severe negative impact on the rest of the business. As part of the risk mitigation strategy, we got several stake holders involved in the potential risk and reward of the project. 

Our initial target markets were Canada and the United Kingdom. We found out at a later point that the UK had a very rigorous and strict approval process for the infomercial before it could be aired.  We easily got the approvals in Canada but the objections from the UK approval board required us to redo the entire production from scratch.  In the future, we would not take a single step in the UK without getting the script approved first.

Another mistake that we made was that we chose to go with a product that was already selling well through our retail customers including the Shopping Channel. Successful direct response products always go from TV to retail sales. As we learned through experience, a backward scenario can create a lot of conflicts especially in the flexibility to structure the price to be successful on TV.  A product (or a similar product) that is easily available in the nearby store shelf is generally not a good candidate for DRTV.

There were some good lessons to be learned on the production front as well.  If I had to name the most critical factor in the success or the failure of an infomercial, I would say it's the host who is presenting the product. A host must be able to get in front of the camera and get the viewers to a state of mind that it will be the biggest mistake of their life if they do not buy the product right now. We selected the hosts with acting background thinking that they would not be shy in front of the camera. However, a good actor is not necessarily a good sales person also who can sell a product with conviction on TV.  An infomercial host has to be an evangelist who can demonstrate his/her passion about the product on camera.  One of our big mistakes was that we did not screen-test the hosts before the actual day of filming.  If I knew then what I know now, I would have stopped the filming and would have given our hosts few more weeks to rehearse the entire script a few dozen times using a handy cam. We had good hosts but we did not provide them enough time and guidance to master the script.

Talking about the script, we had it written by a writer who was very experienced in writing dramas and did an excellent job of writing the script more like a documentary.  Once again, if we had to do it all over again, we would give her a proper guideline to write the script.  We also counted on a producer that we hired to know all these things, but apparently, while he had some experience with the film industry, was absolutely clueless about the infomercial production.

Although it might sound like we dived into this project without thinking much but the fact is that we did put a lot of thought into this entire process from day one. We overcame many technical challenges,  successfully executed the filming process, created wonderful animations, beautifully edited the video footage and came up with an impressive CAT (call-t0-action).  We gave this project to Alive Pro Studios knowing it very well that they did not have much experience producing an infomercial for DRTV. However, it was worth the risk given that we had years of working relationship with them and knew that they will give it their best.  And they did.  The final product was an artistic master piece but just did not deliver the results for the infomercial to be a success.

In the direct response industry, the only measure of success of the infomercial is the amount of revenue that it produces.  At the end of the day, being the president of  Heaven Fresh, I take all the responsibility of less than perfect outcome of the project. The only thing I would add here is that this is not the end, it's just the beginning.  We will go back at it and and I am very confident that all of this time and money investment will pay off in a big way down the road.

If you are interested, you can watch the infomercial here.

Labels: ,

Sunday, March 23, 2008

Product Research & Development

As the Heaven Fresh international distribution network is growing, being a Canadian company we often get requests from partners and customers around the globe  for 'Made in Canada' products.  Besides that I believe that in consumer product business, having the ability to develop new and cutting edge products is one of the most crucial factors to stay ahead of the competition. Therefore, we have been thinking about starting a full fledged R&D department to design and develop Heaven Fresh products from scratch for quite some time now.  We recently hired Marvin Gui to establish and manage Heaven Fresh R&D department. Marvin, with a PhD in 'air conditioning and cryogenics',  has worked with Samsung  Electronics to develop air purification products and has the passion for research.  Passion can be the single most important ingredient for doing research, especially working with a micro-multinational with limited time, financing and resources. Having been there, I personally know that an R&D job can be a nerve wrecking experience, but what's going to test Marvin's limits at Heaven Fresh is the fact that we do not have adequate financing for R&D including his salary.  For the most part, we will be counting on the assistance from the government of Canada through IRAP (Industrial research assistance program) and SRED (Scientific research and experimental development) tax credits.  We, as a company and  particularly Marvin, will be under the gun to make swift progress to be able to continue getting the assistance to keep the R&D going.  He's well aware of the pressure and is excited to take this challenge on. From talking to him it looks like he definitely has the resilience to pull it off successfully. I am also very confident that we will have 'Made in Canada' products  as part of the Heaven Fresh product line within a year or so.

Initially we will be concentrating on designing and building product proto types, but our ultimate goal is to manufacture the products right here in Canada.  It might sound like a crazy idea to even be thinking about manufacturing in Canada when much of the existing manufacturing is moving to other countries from North America.  There are many benefits to manufacturing products here in Canada while the biggest obvious downside is the manufacturing cost. However, I believe that the low cost manufacturing here in Canada is possible and the global increase in wages, fluctuations in currencies and the rise in transportation costs will make it most more cost effective to produce product here in North America. Therefore, as part of our product development efforts, we will be paying a lot of attention to a design strategy for achieving low cost 'Made in Canada' products.

Labels:

Monday, December 10, 2007

R&D Tax Credits in Canada

Canada is one of the best countries to provide SRED (Scientific Research & Experimental Development) tax credits for businesses.  A Canadian owned company can get up to 70% of the money spent on SRED.  By providing tax credits, Canadian government encourages more experimentation and research.  This program is especially helpful for small businesses with limited funds.  Even if a new experiment or development fails, the business essentially gets that money back just for trying, thus reducing the risk inherent in trying new things.

At Heaven Fresh, we have done quite a bit of experimentation on process improvement and product development.  Some of these experiments worked, but others did not as we ended up abandoning them for various reasons. However, it  is the result of trying the new tools, technologies and processes with which we are able to manage all of our offices with very minimal resources.

Our efforts to improve processes and products were really an attempt to run an efficient and profitable business as we were not even aware of the SRED credits in Canada. We came to know about it through Brian Hartman of RDFM (http://www.rdfm.ca) whom I met in a business network meeting.  RDFM helped us put a SRED claim together for a percentage of the claim as the fee for their services. The fee was only charged once the claim was approved and it was definitely worthwhile as it required expertise to determine what can or cannot be claimed and to put the actual claim together according to the Canada Revenue Agency's guidelines.

We received a check from CRA last week for our approved claim. This is a tremendous help for a small business like Heaven Fresh. As a result, we are also planning to step-up our research and development activities.  During the SRED claim process, we also learned another government program  called IRAP (Industrial Research Assistance Program) where the government provides financial and business assistance for research and development.  We have scheduled a meeting  with the IRAP adviser on December 17, 07 and I will post more on IRAP once I get further information.

If you are a Canadian business, I would strongly encourage you to get in touch with Brian Hartman at RDFM and you might be surprised to find out that many of your "routine " activities qualify for the SRED credits.

Labels:

Saturday, December 1, 2007

Loonie effect on Canadian business

Canadian Loonie has been strengthening against US dollar for quite some time now. Last month it hit parity with the US dollar. Although, the prices for Heaven Fresh products in Canada have been higher than the prices in the US from the very beginning, we have been getting much more calls and e-mails from Canadian customers complaining about the higher prices. Since the Canadian dollar is equal to the US dollar, Canadian consumers expect the US and Canadian prices of various products to be the same as well.

The cost of doing business is higher in Canada and the sales volume is lower therefore if we try to reduce the prices in Canada, we will simply be out of business in 6 months. However, it is very difficult to make customers understand the cost difference. Therefore, to make them happy,  we end up offering discounts to the customers who are really upset about the price difference.

Our prices in Europe and Middle Eastern offices are even higher than Canada due to the similar reasons, but we do not face the same challenges as we face here in Canada because customers in those countries do not have the luxury of driving a couple of hours to the largest economy of the world to buy cheaper goods.

I totally understand consumers' frustration in Canada for paying higher prices for the same products than the US consumers as I was in the same shoes before starting the business. But running Heaven Fresh for last few years has made me more aware that although in North American  we, the Canadians,  live in a separate country.  The government policies, the business environment and the costs of running a business are different here.  As Canadian citizens, we enjoy a lot of social benefits which the US citizens do not and the higher product prices are a small payback in return for all that. What do you think?

Labels:

Saturday, October 27, 2007

Two busy weeks at Heaven Fresh

It has been more than two weeks that I wrote my last post. I do not ever remember myself being so busy as it was for last couple of weeks.   Besides entering the high season for the sales activity,  Kamal was out of the office because of his new born baby boy. It was a stark reminder that Heaven Fresh is not a typical MNC but a micro-multinational, where the absence of even one key person can stretch the entire organization across the globe. We also had a blurb published in Globe & Mail about the new Heaven Fresh Personal Air Purifier. These few lines by the Globe editor made the phone ring off the hook for almost one week. This write-up in Globe & Mail was a result of the PR campaign by Celia Love for Heaven Fresh.  I wrote a post about our successful trial PR campaigns in August. We finally came to an agreement with Blessington Love PR where Heaven Fresh will pay them a monthly minimum retainer for writing one press release every month along with 1% of the PR value generated from those releases. Our formula for calculating the PR value is as follows:

PR Value = Advertisement rates in the print media for the space allocated to Heaven Fresh stories multiplied by 3

The reason for giving three times the weight of the equivalent advertisement space in the same media is that the editorial stories get more attention by the readers and have a greater impact.  We are planning to expand our PR activities in other countries as well as on the Internet.

There has also been quite a bit of activity in the UK office for last couple of months. I will be dedicating this coming week writing about our experiences of starting the Heaven Fresh office in London, UK.

Labels:

Sunday, October 7, 2007

Outsourcing and Micro Multinationals

There are two main reasons for ANY small business in the industrialized world to go multi-national. The first and the most obvious one is to expand the market reach.  The 2nd one, less obvious but more important, in my opinion, is to increase efficiency and drastically reduce business overheads.

The former is more realistic for businesses like Heaven Fresh that heavily rely on the Internet to promote their products and services, but is not necessarily feasible for small businesses that need a brick and mortar presence e.g.  a restaurant, a grocery store, a barber shop or a clothing store.  The later, i.e. increasing efficiency, reducing overheads and maximizing profits by hiring overseas employees,  is something that even a home based business can take advantage of. To give a few examples, the daily bookkeeping and accounting is a mandatory chore for every business. Most of the small business owners end up spending a large chunk of their time on the bookkeeping .  This is a task that can be easily carried out by an overseas employees for the fraction of the cost. Certain routine marketing functions can also be outsourced, for example, creative writing, graphics design, coupon creation, distribution of the coupons using online tools, PR and sales analysis etc.  Other more complex functions that can be performed remotely may include e-mail/ telephone customer service, virtual inventory management, security monitoring, data entry and business consulting etc.

It would cost Heaven Fresh at least $10,000 / month (possibly more) in salaries to execute certain accounting, customer service web site development and  marketing functions if the employees are to be hired in Canada, UK or the USA.  But having qualified employees half way across the globe to perform the same functions has reduces the salary cost to only about $2500/month.  Not only that going "multi-national" increased efficiency and reduced overheads but it also freed the time of the local company employees to be spent on business expansion and growth activities.

Although large multi-national companies have been taking advantage of overseas outsourcing for almost two decades now, this trend has not caught up with small businesses. Even though, in my opinion,  small businesses are in a more desperate need of help due to limited resources and financing.

So, why is it that vast majority of the small businesses is not benefiting from this new trend?  Two of the biggest reasons that I see are as follows:

  1. The lack of global networking ability on the part of small business owners to find qualified and reliable people.
  2. Not having the resources to put a software infrastructure in place for collaboration among the geographically scattered team.

Providing both of the above is a monstrous opportunity for any software company. The introduction of low-cost software tools for remote collaboration combined with the "business social networking" can potentially turn every small business into a micro-multinational.

Labels:

Thursday, October 4, 2007

A potential new Micro Multi-National

I got an e-mail from Celia Love, who is managing the PR campaigns for Heaven Fresh in Canada, asking me about the company that was distributing Heaven Fresh products in the UK. She was wondering if one of her other client, Colour Revolution, could also use the same distributor to expand in to the UK.

So, out of curiosity, I spent a few minutes browsing their web site http://www.colour-revolution.com.  Apparently, Colour Revolution is a young Canadian company that is trying to make its mark in the North American market. It is natural for them to think about expanding into the UK to broaden their market reach.  By looking at their web site, I can tell that Colour-Revolution is trying to do EXACTLY what we are doing for Heaven Fresh. The only difference is that the products of the two companies are different. Also, probably our approach is somewhat different from them but the end goal is the same.

Although I have never met the two ladies who started Colour Revolution (http://www.colour-revolution.com/about-us.php) , but having been through the Heaven Fresh experience, I can guess to a very high degree that what they are going through to expand the business and also their thoughts behind finding a distributor instead of opening their own office in the UK.  Here is my quick hypothetical analysis of their business based on my 15 minutes review of their web site:

  • The products are really good and they are passionate about their products and their baby - the business.
  • They are getting a very positive response about the products from the consumers and other retailers.
  • They are up to their neck with the routine work just running the North American operation. 
  • Sales are not coming in as fast as they would like.
  • Cash flow is very tight so they have to cut down on expenses and prioritize where to spend the limited cash.
  •  Attracting more capital is difficult because the financiers (banks, angels etc.) want to know the sales figures.
  • Retailers are taking too long to make a decision to place orders and also have too many demands.
  • Service providers such as web site developer, book keeper, online marketing expert etc. do not want to stick around for long without getting paid "market compensation".
  • They are wishing that they knew how to do all these things by themselves and that there were 48 hours in a day.
  • They are hoping to find a magic wand that can be waved in front of potential customer to get them to move their @$$ for buying the product on the spot.
  • It feels like catch 22. Whether to increase the sales first to be able to get some financing or get the financing first to help increase the sales.

Well, getting financing first is probably the obvious choice but the investors' response is forcing them to go for sales first. This is the exact spot in the business cycle where an entrepreneur's creative juices start flowing.  So, exploring the UK market is a natural call induced by the "creative juices" :). But guess what, setting up an office there is going to cost quite a bit of the money that they do not have. So finding a distributor seems like an obvious choice. However they are going to find it the hard way that a distributor cares less about Colour Revolution.  I am not an expert in fashion industry but my guess is that this is not the only such product on the market.  It's not the product that makes a business successful but rather the PASSION of the entrepreneurs for that product moves the business forward. Miracles do happen in life but my bet is that they are not going to find a distributor in the UK with their level of enthusiasm for Colour Revolution. Hence, the UK sales will be proportional to that level.

If anyone in this situation was seeking my FREE and sincere advice then I would tell them to put their web site to a better use. Connect with the consumer directly. Make more believers. Keep small but constantly revenues  coming in. Start the business in the UK by themselves instead of looking for a distributor. Perform the main functions of the business on their own and  outsource only what they cannot handle by themselves.

Perhaps I should not give any more free advice because "free" does not have much value. Probably I should charge my "market  consulting fee" for "developing a plan" to expand Colour Revolution into the UK market.  And this how the Micro-Multinationals are born.

Labels:

Wednesday, September 19, 2007

First Heaven Fresh BBQ

It's been more than two weeks that I wrote my last post.  Past two weeks have not been very easy. These are exactly the kind of days when I wonder if it was really the right decision to quit the job and get into a business with limited financing and resource. Haaaaaaaaaaah.....So many issues from different offices all at once coupled with some personal stress really got me this time.  I guess that's what running a micro-multinational all about. It tests your limits and then pushes you beyond.  I have learned that the trick is to keep your calm and knock all the problems down one by one. But it's easier said than done. I will try to write in greater detail about the extreme stress of managing a micro-multinational and the ways to cope with it.  But for now let's talk about the happy moments.

We had the first Heaven Fresh BBQ on August 26, 2007.  It was a beautiful Sunday to be in the Morningside Park located at the east end of Toronto. Despite a few minor glitches, it turned out to be a very successful event. Every one enjoyed the sunshine and the delicious food. Here are a few pictures. 

bbqpicnic An overview of the picnic crowed.
irfan_jason_tracy Tracy, Irfan and Jason taking care of the grilling. 
roy_john_joan Roy and Joan Frankel enjoying the food. John's also sitting there in his "Aussie" hat. 
yoramnfamily Yoram brought up the idea of family picnic before the end of summer.  I knew that if we did not do it, he would be harassing me all year long and now he's caught in action. :)
heavenfreshcrowd Is Paula checking out Javad's plate?
celal_jim_monica Celal, Monica, Jim and Irfan in a happy pose.
paula_trace Paula and Tracy worked really hard to organize the picnic. A job well done.

What?  You want a performance bonus for the picnic? :)
john_paula It was Paula's idea to have egg throwing contest. She became the victim of her own idea. John seems happy to dodge the eggs landing on his clothes.
john_brouwer John is doing the prize draw but I still got fingers pointed at for fixing the draw.
jim_celal_winning Looks like both Jim and Celal never won anything in their life before. :)Congratulations!
3_legged_race Three legged race. Azeem literally dragged me to the finish line.
DSC00117 Paula started the egg throwing contest and now she's blaming others for cheating.
DSC00110 Ok, As you can see from my pictures I am not the most photogenic person. But I like this picture :)
imran_speech2 I was fully prepared for an hour long speech. I enjoyed the look on every one's face when I pulled this thick stack of papers out. :) 
imran_speech Believe me, I did not go there straight out of the bed. I look like this because I had to lug a lot of stuff to the picnic spot and it was a hot day.
roy_john_paula People look bored listening to my speech :(  Luckily, I also had a short version ready. Otherwise I would have become the target of all those eggs.
roy_frankel I know what Roy is thinking. 

Roy, I will be more prepared next time. I promise.
heavenfreshbbq1 Heaven Fresh first picnic cake.  I wonder who authorized the purchase of a cake. May be I should investigate and deduct it from their salary :)
heavenfreshbbq Thank you all who attended the picnic and also those who could not make it.

At the end I would like to say that Heaven Fresh could not have achieved this success without the hard work, dedication and sincerity of every one involved.  I feel truly blessed to get to know and work with each one of them. For a micro-multinational people are not the biggest asset of the company but they are the company.

Thank you every one! You guys are the best.

Labels: