Everyone is talking about SEO - search engine optimization. When it comes to getting your small business noticed online, the practice of identifying and refining the path that your customers take to get to you and engage with you to generate sales, leads or engagement. So what about small business optimization in the real world? SEO principles may have meaningful translations to everyday practices.
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The Canadian retail landscape has endured a series of shakeups in recent weeks, with large chain retailers Sony, Target and Mexx announcing plans to close stores across the country. Other medium to large-scale retailers such as clothiers Jacob and Smart Set have suffered similar fates.
These closures are a rather gloomy way for Canadian retail to start the year, however they also provide opportunities for introspection and examination of wider effects and lessons that may reverberate into the small business community.
The Case for Space
Much has been made of the large volume of space now left vacated by these exiting retailers (Target in particular, whose now-empty s may total 100,000 sq. ft. per store.) Some spaces such as these may be repurposed and divided into smaller parcels of square footage more suitable for smaller businesses seeking exposure in urban centres. Space and location are key concerns for small businesses, especially given the ways in which commercial landscapes develop around the mechanics of affordability and exposure for different types of retailers.
A Study in Stock
Target was criticized relatively early on in its Canadian tenure for issues concerning stocking and product availability. The Globe and Mail noted the importance of this issue in a recent post-mortem for the retail chain.
"... for retailers, inventory management is crucial to customers’ perceptions of a brand. If shelves are out of stock, and customers leave empty-handed, research has shown that many of them will not come back."
Small retailers may not have to manage inventory on such a massive scale as a multinational chain, but management and display of diverse and compelling inventory is certainly a weighty issue for businesses of any size.
A Canadian Community
Some of the discussion surrounding Target and Sony's withdrawals from Canada has focused on the economic motivators that drive international companies to experiment with the Canadian marketplace. Many Canadian small businesses are notable for their creation of customer loyalty and a sense of community - qualities that are difficult to find and foster in a much larger chain entity. Many cities, towns and neighbourhoods rely on the input of small businesses to provide essential goods and services where infrastructure does not exist for major retailers to take hold.
On the other side of this equation: in some locations, major retailers become fixtures in the local economic landscape. The displacement effect of jobs and commercial activity may hit these communities particularly hard. This is a case where small business activity could encounter peripheral negative effects as a result of the poor performance of larger commercial entities.
Merchant's Take
Merchant Advance Capital's funding practices have been designed to help small businesses find ways to meet many of their operational needs. These include, but are not limited to, some of the needs discussed above: the need for space, the need to manage inventory, and the need to help create infrastructure and identity in your local economic community.
Welcome to the newest edition of the Merchant Advance Video Blog series, returning for the new year! In case you missed them, the Video Blogs let none other than Merchant Advance Capital President and CEO David Gens answer some of the most pressing questions about the alternative lending space, as chosen by readers and small businesses like you. This week, the Video Blog asks:
What Business Types Are Suited to Merchant Advances?
There are so many different small businesses out there in the world, and as it turns out most of them can benefit from the way merchant advance funding works differently when compared to a traditional loan (for another entry in the video series explaining a few of these differences, click here!)
There are, however, some businesses for whom merchant advance financing is particularly beneficial based on the way they conduct daily sales transactions with their customers in a storefront/brick and mortar space. Watch the short video below to learn more!
You may recall our recent blog on the incredible versatility afforded to modern small businesses by a blend of brick-and-mortar accessibility and e-commerce-driven ease of use.
Today on the Merchant Advance Blog, it seems relevant to highlight a recent post made over at the venerable New York Times Small Business column by contributor Darren Dahl (@darren_dahl) which expands this discussion even further.
As the column illustrates:
“It’s hard to support both retail and e-commerce.... At some point there is conflict between the two, and one side suffers.”
Dahl's example, of a Boston-located jewelry store, provides an interesting new wrinkle on the idea of multifaceted small business development across "click and brick" lines, meaning digital and brick-and-mortar respectively. In the case study, the brick and mortar jeweler joins forces with a large-format web-based seller, a sort of Amazon for shiny trinkets, to offer a wider range of products with the personalized customer service that comes from engagement with real human beings. The symbiosis achieved is unique as far as this blog's current research on the subject of integration between online and real-space retail commerce.
What is your take on the blend between digital and physical retail space? Could your business benefit from a hybrid "click and brick" model? Let us know via social media using the buttons below.
I vividly remember my first day assisting with a professional studio recording. It was time to put a year's worth of training to real use, and I showed up bright and early to greet the session producer with all the morning's necessities put in order. I was going to own it. Best assistant ever. Twice the brains, twice the awesome. How could it go wrong?
The producer arrived and set up his desk, the artist showed up not long after. Each filled up their first coffee of the day, and the two proceeded to get to work. I sat on the studio couch like a puppy eager for someone to throw the nearest stick, to give me a task, let me show off my knowledge. The stick never came. The session rolled like a well-oiled machine, churning out creative energy. I felt useless.
Only once we were wrapped up did I understand the first of many lessons to come in the studio: namely, you can often learn deeply by simply sitting back and observing someone with far greater experience.
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Today's blog brings you a perspective on the lending world from none other than Merchant Advance Capital's President and CEO, David Gens. We have received numerous questions about "stacking" or obtaining financing from different sources simultaneously, and whether this is a good idea for your small business. Read on for David's insights on this pertinent issue!
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Rest assured, your humble blogger has always been planted firmly on the West Coast side of one of the most divisive cultural arguments in Canada: simply put, will your preference be the Vancouver Canucks, or Toronto Maple Leafs? I lived in Toronto for quite some time. I have many Torontonian friends, all of whom delight in rubbing salt in the many wounds left by Vancouver's fumbling history in the sport of professional hockey. I acknowledge that Merchant Advance Capital itself has proudly expanded not far from the lovely lakeshore of that fair Eastern city. And yet, I remain steadfastly dedicated.
That being said, I could not suppress a pang of hurt when I heard today's news that those guys in the blue sweaters in the Eastern Conference of the NHL decided to relieve coach Randy Carlyle of his duties. Carlyle's dismissal comes during what seems like the latest in a string of miscues for the long-suffering Leafs. As this blog has examined before, hockey is a business. And a highly lucrative one at that. So, what can your business learn from the way Carlyle and his team have handled (and mishandled) the pressure of competition? Without further ado: (more…)
With the imminent arrival of the Thomas Pynchon novel Inherent Vice in theatres, your blogger has been on a tear watching and re-watching the films of esteemed American director Paul Thomas Anderson. There are some real gems to be had in his catalogue: Hard Eight, Boogie Nights, Magnolia, There Will Be Blood, and The Master to name a few. A night or two ago, I settled in to revisit Punch-Drunk Love. The film, released in 2002, was noted for an idiosyncratically dramatic performance by big-budget funnyman Adam Sandler - one in which he played decidedly against type as a lonely, awkward businessman. In addition to earning a place in the canon of strange films about strange people, Punch-Drunk Love also hides some lessons about business and money management.
Pudding and Proofs of Purchase
Sandler's character, Barry Egan, is a highly professional, capable and enthusiastic entrepreneur dealing in the trade of novelty toilet-plungers and other such strange paraphernalia. He is introduced to the viewer in a way that betrays a fairly unique sense of consumer and business savvy - a phone conversation in which he appears to outsmart a retail promotion designed to earn frequent-flyer miles by turning in proofs of purchase.
Barry discovers a way to optimize the rewards offered by this promotion, spending relatively small amounts of money on pudding cups to accrue a staggering number of flyer miles worth many times the value of his purchase investment. Anderson rather strangely makes the pudding subplot very important in the overall arc of the film, and as it turns out, this part of the story was not entirely a fictional construct. In 1999, an American entrepreneur named David Phillips actually conducted the same consumer experiment. Phillips succeeded in convincing American Airlines that his claim to the reward was legitimate, and was later awarded the highest rank in their frequent flyer program in perpetuity.
The audience is led to believe that the pudding venture will turn out to be a tragic, misunderstood fool's errand, a consequence of poor judgement that leads the character to spend thousands of dollars (on pudding he will never eat) for nothing. Surprisingly, Anderson shows us in the end that Barry's attentiveness to thrift and careful, businesslike management of "the fine print" work out to his benefit after all.
Phone Bills and Punch-Ups
Moments throughout Punch-Drunk Love highlight Barry's intense loneliness and childlike naiveté. A pivotal series of scenes show him dialling up a lengthy conversation on a phone line offering to help callers "find love," not realizing that it is in fact a call-girl service with a tremendously expensive per-minute rate. The phone-line operators obtain Barry's credit information, Social Security number, and home address, and proceed to blackmail him when he realizes the extent of the charges.
Such obliviousness to basic scam architecture and sudden, poor money management as well as disregard of "the fine print" fly in the face of his initially demonstrated, highly intuitive and intelligent business appraisal. Negative emotions drain Barry of his entrepreneurial savvy and set in motion a series of escalating debts that set another of the film's major plots in motion.
Money Management
As Punch-Drunk Love proves, keeping a clear head about your business' cash management can be the difference between coming out ahead or finding yourself in perilous circumstances. Take a look at this great article by Reuters, which sums up some key concepts on money management and cash flow if you're keen to learn more about this crucial aspect of managing your small business operations.
Without sounding like too much of a fanboy, your blogger can safely say that The Economist is one of his favourite reads. It's a weekly digest on the world that tackles topics that often range far beyond the financial or economic. You should read it.
In my perusal of the magazine's latest issue, I came upon this fascinating article. Its writer examines the linked and complex relationship between technology and labour, going back to the time of the industrial revolution. It was once feared that increased automation and mechanization would create a dire vacuum for the supply of human labour, despite the incredible surging effect that machine-powered work had on the world's dominant industrial economies. Now, in the computer age, there are new questions to struggle with.
"The combination of big data and smart machines will take over some occupations wholesale; in others it will allow firms to do more with fewer workers. Text-mining programs will displace professional jobs in legal services. Biopsies will be analysed (sic) more efficiently by image-processing software than lab technicians..."
There is certainly evidence that computerized and data-centric approaches have affected the consumer and business lending marketplace as well. The Economic Times business glossary, for instance, recognizes a definition for "Automatic Underwriting:"
"... Involves screening of loan applications through pre-designed computer programs (commonly known as automated underwriting engines) which results in faster and efficient decision making on the sanctioning of the loan application. These automated underwriting engines generate almost instant decision on loan applications, thereby saving time. Also, since it is algorithm driven, decisions taken are generally free from human errors."
At Merchant Advance Capital, our team has developed some incredibly smart data-wizardry that helps us make key decisions about your application, find the right withholding percentage for your business, and suggest an ideal way to get you up and running with a sustainable flow of working capital. Modern information sources such as provincial databases, Equifax records and other online systems definitely play a part in how we work.
However: this does not mean we are making automated decisions! Our underwriting team would probably be a little bit offended if we suggested that they might be discarded in favour of a computer program. Quite simply, we believe that your small business is unique enough, and distinct enough as a living, breathing commercial organism, that an automated process might not understand it fully. There are so many factors that need to be taken account - ones that go beyond your financial statements. As we mentioned in an earlier blog this week, evaluation of things like your relationships with landlords and suppliers and even social media content can come into play during the underwriting process. Conclusions about these information sources need to be drawn subjectively for the most part.
Two key tenets in the argument for automation are increased speed and decreased overhead cost. To address the first of these concerns: even with a human-powered underwiting framework assisted by computerized data processing, the turnaround time to funding on a Merchant Advance application can be as short as a few days.
Taking a look at the second, consider this quote from the 1997 paper by Wayne Passmore: "The Effect of Automated Underwriting on the Profitability of Mortgage Securitization."
"... automated underwriting is unlikely to decrease processing costs uniformly for all... applications. Instead, it makes identifying and processing low-risk... borrowers less costly, but may not significantly lower the costs of identifying and processing relatively high-risk applicants."
In short, Merchant Advance Capital doesn't employ robots. Our clients are people, and it is the personality and specific approach of each client that drives their business. As such, we value the input and intelligence of our team of people in determining the best way to secure funding for your business.
