August 2006 Back to August issue index
Mom ’n Pop businesses not good for Bands
New B.C. Hydro projects will fuel self sufficiency
First Nations company benefits in computer leasing deal
An Aboriginal gathering that’s all about opportunities
Mom ’n Pop businesses not good for Bands
By Andrew Leach, MBA
Andrew Leach is from the St’at’imc Nation, has a Bachelors and a Masters degree in Business Administration. He is presently completing his doctorate in Management. If you are interested in giving feedback to this article, please email Andrew at andrew@andrewleach.com
As a management consultant, I have seen too many Bands lose too much money trying to run mom and pop businesses.
In this article, I will present some key ideas around Bands developing and executing a viable economic development strategy. And it starts with this: stop running those mom and pop businesses!
“Mom and Pop” businesses are those which are typically owned and operated by an individual or couple. Their main features are:
• Small revenue base, usually less than $200,000/year
• Small staff, usually less than 4 employees
Small convenience stores, retail outlets and small motels are classic mom and pop businesses.
Mom and pop businesses require a lot of long hours to develop and sustain.
Bands shouldn’t run mom and pop businesses.
For starters, why are you wasting your time with nickels and dimes when there are dollars upon dollars available in your area?
As well, whoever you hire to manage your mom and pop business will not put the 14-18 hours per day in to establish and grow the business.
And if they are prepared to commit the time, they probably want a wage for every hour that they work.
Moreover, mom and pop managers will not treat the business like their own - because it isn’t.
For instance, purchasing decisions and human resource decisions can be very costly. And if the business is not yours, what motivates you make the best decision?
Thus, Bands owning mom and pops contradict the small business model of working long unpaid hours and acting in one’s best interest.
Often, Bands pay lots of wages in the mom and pop businesses that they own. Look at the financial statements of your moms and pop business. Where are all the expenses? Are they controllable?
I have seen too many Bands lose their shirts sinking money into fledging moms and pops. They sometimes end up taking their INAC operating dollars to fund the operations. It’s not long afterwards that remedial management kicks in.
Another interesting phenomenon is that some Bands seem to be emotionally attached to their mom and pop businesses. Even when it becomes clear that the business is running them into the ground, many leaders are reluctant to let go.
I hear things like “it provides us with employment.” “We are counting on things to turn around.” Stuff like that. To me, that’s just denial. The writing is on the wall and we often do not want to read it.
There has to be a better way.
Bands should develop a sound business strategy that matches its strengths and weaknesses with the regional economy’s strengths and weaknesses.
As well, Bands should go after only those businesses which can justify hiring a full-time manager- and still have enough left over for some profit to the Band.
As a rule, if your Band business has less than $300,000 total investment, it may be too small to effectively run as a Band-controlled entity. You should probably turn these smaller businesses over to Band members. Let them run these businesses for themselves. Like the way they should be – as moms and pops.
Instead, focus your energies on bigger, profitable projects.
I have worked with many bands that have done well in the resource sectors. As well, some construction projects have done quite well, too. Some Band-based tourist projects can be profitable, as well. But be careful with the tourist projects. A lot of them should be run as moms and pops.
New B.C. Hydro projects will fuel self sufficiency
By Terri Theodore
While B.C. Hydro plugs in to 38 new independent power projects around the province, consumers will have to dig deeper to pay for their power.
The projects include power generated from wind, water, coal and waste from wood, construction material and even municipal landfills.
If all the projects get up and running, they could generate 7,000 gigawatt hours of electricity every year, or enough to supply 700,000 homes.
The downside for consumers is the extra cost of the projects.
“New generation is obviously going to cost money. You don't get it for nothing. So obviously there will be some rate increases,” said Energy Minister Richard Neufeld.
He said B.C. Hydro will try to minimize those rate increases as much as possible, but said power is still a good deal in B.C.
“Your hydro bill is the third-lowest in North America,” Neufeld said, pointing out Alberta residents pay about 80 per cent more for their electricity.
But New Democrat Guy Gettner argued the Liberal government's privatization agenda was the problem, saying customers wouldn't be paying more if private companies weren't involved.
“We believe that the costs to the utility and to the rate payer will be continue to soar as the government continues to out source to its friends and insiders,” said Gettner, MLA for Delta-North.
“The solution would be to increase hydro capacity, continue with the W.A.C. Bennett legacy.”
The projects are also expected to generate about 12,000 jobs from as far south as Port Alberni on Vancouver Island to as far north as Chetwynd, B.C.
“Four billion dollars worth of construction – which is probably the largest undertaking ever in the province – will actually bring forward an awful lot of jobs,” Neufeld said during a news conference July 27th.
Green Island Energy Ltd. plans to develop a biomass fuel power project in the old Bowater Pulp Mill at Gold River.
The community has been starved for jobs since the mill closed down in the late 1990s.
First Nations are also getting involved.
The Hupacasath First Nation is planning a run-of-river hydro project near Port Alberni.
Several First Nations groups are involved in two Plutonic Power Corp. river hydro projects near Powell River.
“We'll be investing over $500 million north of Powell River with the local community and First Nations,” said Plutonic's president Donald McInnes.
B.C. Hydro president Bob Elton said the Aboriginal business projects will be a model for power generation across Canada. Elton said the projects fill a large part of what would be a significant energy gap.
“They'll help meet the electricity needs of British Columbian's for 30 years to come,” he said.
Elton said three-quarters of all the projects are clean, green energy.
“`It means we're well positioned to keep having not only the lowest rates in North America, but also the cleanest power in North America.”
The minister said this doesn't change the government's plans to go forward with exploring the potential development of the controversial Site C dam project in northeast B.C.
Energy companies accepted by government for the projects are firmly committed financially with a deposit of about $10,000 per mega watt of power expected to be generated.
If the project doesn't work, the deposit is non-refundable.
The province currently imports about 10 per cent of its power from outside the province and the goal is to make the province energy self-sufficient over the next decade.
“Everyone of us wants to keep the lights on. We don't want brown outs in the province of British Columbia,” Neufeld said referring to recent power outages during a heat wave in California.
“I'm really excited about this,” he said. “I'm almost electrified.”
First Nations company benefits in computer leasing deal
A First Nations company in Regina has been awarded a business venture worth $100,000 in a computer leasing deal just negotiated by the province.
Morning Star Technologies, an Aboriginal-owned IT firm that provides professional services, will refurbish used government computers for resale.
The venture is part of a larger computer leasing deal announced recently between the Information Technology Office, which provides IT services to more than 3,000 Saskatchewan government employees, and Lenovo, a personal computing company, in which Lenovo will supply the ITO with its computer hardware for the next three years.
Dwayne Hnatiw, vice-president of corporate development for Morning Star, said the venture will help the company bring First Nations people and technology together.
“I think the Aboriginal community is going to be one of the big drivers of the economy in this province,” he said.
“What we need to do right now is start to harness those ideas and enable them, by giving them the technology and by training people that are out there to be comfortable with technology, to use the technology, and to be able to do the day-to-day stuff out there. We want to come out and mentor people, train people, and be there for them long term for when they need something.”
He said the company plans to sell the used computers to businesses, schools and First Nations across the province.
Under the leasing deal, Lenovo will provide up to 12,000 computers for 16 Saskatchewan government departments and agencies. The cost of the hardware is not to exceed $14.5 million.
Currently, the ITO provides IT services for these departments and agencies.
The Regina branch of NexInnovations Inc., a company that provides IT consulting and support services, will supply the computers under the deal. The company will also service all leased equipment.
In a news release, Hnatiw said it's felt the new deal “will further contribute to our ability to hire and retain the youth of the province that are looking for entry-level technology positions to start and create a long-term career in Saskatchewan.”
An Aboriginal gathering that’s all about opportunities
If you are an Aboriginal entrepreneur thinking about starting a business or if you’re looking for innovative ways to grow your operations, you can’t afford to miss the chance to learn and network at “It’s All About Opportunities”.
For the fourth year in a row, The Business Link’s Aboriginal Business Services is presenting this two-day Gathering of Aboriginal Entrepreneurs from across Alberta. (The Business Link provides business information and advice to Alberta’s small business community.) It's all happening in Edmonton this October 23 & 24 at The Coast Edmonton Plaza Hotel.
Qualified professionals will provide practical advice and information in various sessions covering topics such as starting your business, marketing and promotions, business trends, cash flow, and business succession planning. One of the new features this year is a special panel discussion dedicated to a topic that is of concern to businesses across the province – the shortage of skilled labour.
Throughout the two days, you'll be able to network with fellow business owners and others who are considering starting a new business, as well as those who provide services to the Aboriginal business community.
You’ll hear from successful Aboriginal business owners who will share stories of the ups and downs of owning your own business, the challenges they faced, and the successes they have achieved in today’s competitive world.
Whether you’re in business, or want to be…whether you’re an Aboriginal student with a desire to be your own boss once you graduate, or someone providing services to the Aboriginal community…you will benefit from this information-packed program.
Register by October 6th for the economical fee of $100.00 plus GST ($125 plus GST after October 6th). For more information and to register, contact Conference Coordinator Stephanie Sarjas at 780-422-7706 or through The Business Link’s toll-free number 1-800-272-9675.
Attend this gathering to take advantage of opportunities to learn, to network with people from across the province, to share ideas, and to make professional contacts that will help you develop your Aboriginal business in Alberta. It's all about opportunities!