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THE BUSINESS RESEARCHER NEWSLETTER ARCHIVES

January 22, 2000 Volume 4 Number 1

 CONTENTS

* Introduction - Editor's Comments

* What's New at www.gdsourcing.ca

* Statistics Canada releases

* Should I Start a Dot-Com Business?

* Researching International Markets for Services

* Small Business Stats Facts

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INTRODUCTION - EDITOR'S COMMENTS

 

Hello,

Welcome to the first issue of the BR Newsletter in 2001.

We have been busy over the holidays. Our Statistics Canada site summaries have now been segmented in 21 sectors. This allows us to include direct links to free publications available at the Statistics Canada web site. Take a look at: http://www.gdsourcing.ca/works/StatCan.htm

The Toronto Business Development Centre has released its January to June seminar schedule and I am booked to speak on three occasions on Marketing Research & Analysis. The dates are February 6th, April 3rd and June 5th. All are Tuesday nights at 6:30 to 8:30. Free parking. Contact the TBDC for more information 416-345-9437.

Finally we have added some information on alternate revenue streams for Internet Businesses (e.g. affiliate programs and advertising revenue) at our Canadian Research Centre for Internet Businesses

http://www.gdsourcing.ca/gdsinternet.htm

I hope you find this issue useful.

Thank you for your subscription.

John White

Editor, BRN

 

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WHAT'S NEW AT www.gdsourcing.ca - POLLS, CABLE TV, INTERNATIONAL COMPARISONS & MORE POLLS

 

NATIONAL PUBLIC RELATIONS

http://www.national.ca/

- Most respected Canadian companies

- Credibility of Internet as an information source

 

CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION (CRTC)

http://www.crtc.gc.ca/

- Number of licensed cable television undertakings, by province

- Number of programming, transmittings and radiocommunication distribution undertakings by province and type

etc.

 

UNION BANK OF SWITZERLAND

http://www.ubs.com/

-Prices and Earnings around the Globe (covers Toronto & Montreal on a variety of variables with international comparisons)

 

THE COUNCIL FOR CANADIAN UNITY

http://www.ccu-cuc.ca/

- Destination 2025

A study of how Canadians between the ages of 18 and 25 see their personal situations and the situation of the country, evolving over the next 25 years.

- Portrait of Canada 2000

Annual Survey of public opinion in Canada.

- Various facts & figure about Canada

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STATISTICS CANADA RELEASES

 

The following statistics were release by Statistics Canada over the last four weeks. We have listed those releases we feel are of the most interest to Canadian entrepreneurs.

Very few of these statistics are available on-line. The URL listed is a direct link to the press release associated with the data. It provides contact and ordering information.

 

AGRICULTURE

 

Canadian potato production 2000 (revised)

http://www.statcan.ca/Daily/English/010119/d010119f.htm

 

Farm business cash flows 1997 to 1999 (revised)

http://www.statcan.ca/Daily/English/010119/d010119c.htm

 

 

CULTURE & ENTRETAINMENT

Canadian culture in perspective: A statistical overview

http://www.statcan.ca:80/Daily/English/001222/b001222b.htm

 

 

DEMOGRAPHICS

 

Population structure and change in predominantly rural regions

http://www.statcan.ca:80/Daily/English/010116/b010116a.htm

 

 

Literacy in Canada: Disparity between francophones and anglophones 1994

http://www.statcan.ca:80/Daily/English/001222/d001222k.htm

 

 

ECONOMIC INDICATORS

Year-end labour market review 2000

http://www.statcan.ca/Daily/English/010117/d010117a.htm

 

 

HEALTH SERVICES

Mental health statistics 1996/97 and 1997/98

http://www.statcan.ca/Daily/English/010117/d010117f.htm

 

 

INTERNET

Internet by cable 1999

http://www.statcan.ca/Daily/English/010117/d010117g.htm

 

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SHOULD I START A DOT-COM BUSINESS?

 

It is a question we've been asked quite a bit since the "Internet meltdown" at the end of 2000. (And we were all expecting something to happen at the beginning of Y2K) Unfortunately it is a question that is impossible to answer. It is like asking, "should I start a business in the mall?" Before you can give any sort of relevant response you need to ask further questions:

What type of business do you plan to start? (E.g. manufacturing sewer grates in the food court will definitely not work but a juice bar might)

What will you sell? Is it relevant to the market shopping in your mall? (Believe it or not, not everyone is interested in purchasing Danish Blue cheese.)

What is your target market? What is the price point they expect and prefer? (Do they actually spend Canadian Tire money or merely store it in the drawer at home?)

What mall or malls are you considering locating in? (An outlet mall in Thunder Bay is very different from a theme mall in Edmonton (you know the one).

What is the economic performance of the local economy? Is the local community growing? Etc. Etc.

All the same types of questions need to be answered for an Internet-based business. An Internet-based business is not fundamentally different from any other type of business. You still need to understand the true nature of your target market and how best to reach it.

Although many new entrepreneurs think it is, the following statement does not constitute market research for an Internet business:

"In 1999, about 42% of all households, an estimated 4.9 million, had at least one family member who used the Internet regularly from home, work, school or other locations, up from 29% two years earlier." (Source: Statistics Canada)

It is a good opening line but it tells you nothing about the particular purchasers that you are targeting. 100% of households purchase food from stores. So what? It does not mean that anyone of them will buy your blueberry jam!

The Internet in and of itself, like any business environment, guarantees neither success nor failure. A Company's success is based on how well an individual business takes advantage of the opportunities available in its industry, market and environment.

The rise and so-call fall of the Internet has been a dramatic news story but it has been somewhat exaggerated by investment speculation. THE INTERNET IS NOT DEAD (nor is it the killer business tool we have been promised for the last five years.)

It is fun to read about the excesses and superlatives surrounding the Web but the truth of the matter is that there are many companies on-line that have grown at a comparatively moderate pace and are still very much in business and will be so for many years to come.

It has been estimated that 15% of existing major dot-com companies (those that sell purely on the Internet) failed in 2000. Given the fact that less than 50% of new small businesses survive three years of operation, the reaction to the dot-com failure could be considered over-hyped. (Of course don't tell that to investors who lost a lot of money on severely over-valued stocks!)

You can't blame the media for the distortion. We all prefer to hear about how the rabbit lost the race, about all his feasting in the farmer's field and excessive hopping about. Who cares that the tortoise rested for an uneventful twenty minutes in his shell before he continued on his way to victory?

At GDSourcing.com, we have been operating an Internet-based business since 1997. Believe me, we are by no means a rabbit or even a mammal for that matter. I would like to think we are a comfortable reptile that is growing bigger each year. One day we will be a full-grown crocodile! Watch out!

We have watched a lot of web trends come and go and we have eagerly read all the hyperbole about them. At times we have even been guilty of perpetuating them. (Oops Sorry about that!) But we are still very much in business. Our revenues have not slowed, our growth has been steady and our potential is still fabulous.

The greatest opportunity presented by the Internet is access to niche and global markets. The greatest challenge is turning that opportunity into a successful business model.

Nearly every major dot-com that has failed experienced phenomenal growth in market penetration. However, they could not translate that growth into profit. It does not matter how many customers you have if every sale is costing you more than the price your charge! Despite what some Internet entrepreneurs thought, none of us have the luxury of going very long without a positive cash flow.

No matter what your business is, whether it be based on-line or not, realistic profitability should be a short-term goal.

After you have determined there is an on-line market for your product/service and you have assessed the strength of your competition both on-line and off, you must examine the viability of your business model.

Do not look to your competitors for a business model. Consider your own product, your own market and the unique features of both.

In Canada there are two companies vying to be the leader in online grocery shopping: Grocery Gateway and Peach Tree. Both have not had any problems in finding customers. To date the two companies combined have signed up nearly 100,000 Canadians. However neither has yet to turn a consistent profit.

The reality of the market is that many busy families enjoy the convenience of home delivery but are not willing to pay the estimated cost of $12 for the groceries to be delivered. To be successful, on-line grocers must develop a business model that absorbs a portion of the cost and allows for profit elsewhere in the business' operation.

Grocery gateway and Peach Tree each employ a different business model.

Toronto-based Grocery Gateway owns and operates its own warehouse and delivery system thereby eliminating the middleman, namely the retail grocer.

Montreal-based Peachtree Network teams up with existing retailers who do the picking, packing and delivery in order to take advantage of existing supply infrastructure.

Both companies insist that profitability is close at hand and the jury is still very much out as to which has the better model. Both models are viable and appropriate provided that both companies stay focused on profit and recognize the inherent short comings of each model.

The Grocery gateway model requires a great deal of initial investment. It is important that they do not get overwhelmed by debt.

The Peach Tree model gives up a great deal of quality control to local partners. Peach Tree has already experienced the problems that can occur with their first grocer affiliate in Toronto. They must choose their partners carefully and monitor them regularly.

A successful company recognizes the best opportunities and does not force a business model where it does not belong.

Should I open a dot-com business?

Definitely! If...

- your product/service is appropriate for the Internet business environment

- your market purchases on-line

- you can successful compete against your competition both on-line and off

- your business model is based on profitability not market growth

The decision to start an Internet business, like any business, should be based on solid market research. Forget the hype. Forget the doom and gloom. Assess only the real opportunities that exist.

 

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RESEARCHING THE INTERNATIONAL MARKET FOR SERVICES

 

Beaver Pelts! From the very beginning the economy of Canada was based on exports. In 1868, $53 million in goods were sold abroad. 131 years later in 1999, that number has blossomed to $360.6 Billion.

While goods are still the backbone of our export economy, the trade in Canadian knowledge and expertise is also growing steadily. In 1999, $51.8 Billion in Canadian services were sold outside of the country, an increase of 6% over the previous year. Many small and medium sized firms are active in this market.

When you are looking into exporting a service, it can be difficult to assess foreign demand and potential. Unlike commodities that are counted as they clear customs, there are not any standard surveys or government forms to track the international trade in services.

There is however one publication from Statistics Canada that can shed some light on the services market outside of Canada. "Canada's International Transaction in Services" (cat# 67-203) is an annual publication that covers transactions in travel, transportation, commercial and government services. The detail of the source database is limited, only 32 service categories are covered (e.g. computer services, advertising services) however the data segmentation can be enlightening. Information is segmented by payments (imports) and receipts (exports), by affiliated and non-affiliated companies, by geographic regions, by industry sector purchasing, and by country of control.

Due to the length of time involved in segmentation and data collection 1998 details were released in 2000. Clearly this source has limitations but if you are looking at exporting your services it is an excellent launching point for your research.

The federal government recognizes the importance of fostering the export of Canadian services. They have therefore created a number of other information sources to assist Canadian entrepreneurs.

First and foremost is the Industry Canada "Take a World View... Export Your Services" web site. ( http://strategis.ic.gc.ca/SSG/sc01071e.html)

Their "About Us" section describes it best:

"Take a World View...Export Your Services is a comprehensive information site for service exporters, aimed at enhancing their chances for success in foreign markets. It provides answers to the most often asked questions about exporting services, makes it possible to determine export readiness, and helps to prepare for doing business internationally.

"Take a World View...Export Your Services features information on world markets for service exporters, available assistance, publications, useful contacts and exporting tips. It also offers numerous hot links to other relevant information sources."

It is organized into three basic modules:

The first, Shedding Some Light on Exporting Services, contains sections on setting the stage for exporting, assessing export readiness, acquiring export skills and reviewing the business plan.

The second, Preparing the Tools to Export Services, deals with the preparation of an export plan, researching the market, creating a marketing plan and addressing the issues of export financing and insurance.

The third, Stepping onto the World Stage deals with the issues of market entry, service delivery, day-to-day operations abroad and expansion into new markets."

Especially look at the Summary Matrices for Services Export Opportunities ( http://strategis.ic.gc.ca/SSG/sc01185e.html). They provide a quick rating (low, medium, high) for export potential in individual countries & U.S. regions by industry sector. They also provide ratings on specific export issues for each country & U.S. region (e.g. market size, growth prospects, market access etc.).

You will also want to look at the information available at the Foreign Affairs and International Trade web site: InfoExport  (http://www.infoexport.gc.ca)

First of all they have foreign market research reports that you can access free of charge either by industry sector (http://www.infoexport.gc.ca/ie-en/IndustrySector.jsp) or by country (http://www.infoexport.gc.ca/ie-en/EServices.jsp )

Foreign Affairs and International Trade also have portal sites to help selected sectors. For example look at their Canadian Knowledge Industry site ( http://www.dfait-maeci.gc.ca/ics-cki/menu-e.asp) which provides information related to the export of educational related services and products.

Other sections of note include: Businesswomen in Trade (http://www.infoexport.gc.ca/businesswomen/menu-e.asp) and Export Source  ( http://exportsource.gc.ca/).

The Canadian government is limited by the size of its consular staff abroad as to the amount of foreign market research they can conduct. If you do not see an appropriate research report at the Foreign Affairs & International Affairs web site, look at the U.S. government web site Tradeport.org. ( http://www.tradeport.org/ ) Their market research section provides information from every country the U.S. has consular staff in. (which is quite a few!) ( http://www.tradeport.org ) Each country also has an overview of its economy and political climate.

Of course the site is designed for U.S. entrepreneurs looking to export their goods and services so it does have any information related to the United States.

For statistical information on individual U.S. states look at the Fed Stats web site: http://www.fedstats.gov. It is a gateway to statistics from over 100 U.S. Federal agencies including the Census and Business Registers. For economic forecasts of individual U.S. states, go to the individual state government web site and look at their economic department's reports.

Exporting a service can be a challenge but there are a number of resources available you can use to assess your market potential and expected market penetration. Use Them!

 

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SMALL BUSINESS STATS FACTS

 

Each Business Researcher Newsletter ends with a collection of five statistics that every entrepreneur should be aware of.

 

1. Are small firms exporting their products?

There was a 21% increase in the number of small Canadian exporting firms (exporting less than $1 million in goods) from 1993 to 1997 (most current data available) In 1997 20,911 such firms were identified.

Source: Statistics Canada (2001)

 

2. What percentage of all Canadian exports do small exporters account for?

1.8% (The top 1,317 large-scale exporters in Canada account for 81.5% of the value of all Canadian exports.)

Source: Statistics Canada (2001)

 

3. How do Canadian entrepreneurs secure business loans?

Over half (53.5%) of small business entrepreneurs have given personal guarantees to secure loans. Forty per cent have used their own homes as collateral, and 20 per cent have used their investments and retirement savings as collateral.

Source: The Trimark Seg Fund Survey (1999)

 

 

4. Are Canadian small business owners family oriented?

Nearly 70 per cent of small business entrepreneurs have both a spouse and children to consider.

Source: The Trimark Seg Fund Survey (1999)

 

 

5. After financial concerns what is the biggest challenge for Canadian Small Business owners:

TIME!

Three-in-five small business owners put in over 50 hours of work per week, leaving many feeling stressed out.

Nearly two-in-five said the demands of their business have impacted the amount of quality time they are able to spend with their family, and one-third indicated they don't have enough time for non-work related activities.

Source: American Express (1999)

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URL: http://www.gdsourcing.ca/newsletter/newsletter4-1.htm
UPDATED: 07/31/03
1998-2003  GDSourcing - Research & Retrieval