February 2014 newsletter

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The Leading Edge February 2014
Small Business Success
Taking Care of Business  

    Contents
In this Issue

The Year of the Bitcoin Part I

The Year of the Bitcoin Part II

5 Ways To Improve Your Chance Of Getting A Loan

3 Great Business Author's Blogs

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THE LEADING EDGE - your monthly link to groundbreaking ideas for entrepreneurs

Top 10 business ideas & opportunities for 2014


Small Business News:

Small number of Canadian businesses now accept Bitcoin - MONTREAL - Will that be cash, credit card or Bitcoin? A small number of Canadian businesses now accept Bitcoin, the digital currency that made its debut five years ago, and has been gaining momentum ever since. Read more...


Canadians Optimistic That 2014 Will be a Better Year for Small Businesses - Techvibes Newsdesk (Jan 23, 2014) - How do Canada's small business owners, the drivers of the economy, feel about the prospects for their business this year? Read more...


Millions flow into new fund to support Canadian businesses (Globe and Mail) - Ottawa has doled out another small tranche of the hundreds of millions of dollars it promised to the venture capital community almost two years ago. Read more...


Canadians stressed out by government paperwork: Poll - Toronto, January 27, 2014 - As the Canadian Federation of Independent Business (CFIB) launches its fifth annual Red Tape Awareness Week™, a new report links red tape to added stress and estimates the cost of some of the most common regulatory headaches for Canadians to be at least $10 billion per year or $730 for the average Canadian household. Read more...

 
    The Year of the Bitcoin Part I
 
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First, for those of you have yet to hear about this new payment system slash currency, a Bitcoin is a virtual, or digital currency, first launched in 2009. Many people are suspicious of this 'new' form of currency and probably rightly so, but it is gaining in credibility. A university in Cyprus has started to accept Bitcoins as payment for tuition; it is the first to do so which may not be surprising considering it offers a masters degree in digital currency. However, many pundits are saying that this digital currency's time has come and that it is going, or has already gone, mainstream. The fact that the first Bitcoin ATM appeared in Vancouver, B.C. last year quickly followed by machines in Toronto, Ottawa and Montreal in early 2014 certainly points to its increasing popularity.

Although the whole Bitcoin thing can be technically confusing you don't have to have a degree in digital currency to get started. bitcoin.org is a good place to get information and is one of the resources used for this brief introduction to this fascinating topic.

Investopedia (www.investopedia.com) provides the following definition, A digital or virtual currency that uses peer-to-peer technology to facilitate instant payments. Bitcoin is a type of alternative currency known as a crypto-currency, which uses cryptography for security, making it difficult to counterfeit. Bitcoin issuance and transactions are carried out collectively by the network, with no central authority. The total number of Bitcoins that will be issued is capped at 21 million to ensure they are not devalued by limitless supply. They are divisible to 8 decimal places; Bitcoin fractions are called satoshis. Users store their Bitcoins in a digital wallet, while transactions are verified by a digital signature known as a public-encryption key.

If you want to start accepting and spending Bitcoins you will have to install a Bitcoin "wallet" on your computer, or mobile device. This will provide you with your initial Bitcoin address. You will be able to create further addresses later if you need them. You will need to give this address to people who want to pay you, or when you need to pay them. Your Bitcoin address is a little like an email address except you only use it once.

The whole Bitcoin network relies on a shared public ledger called a block chain. I'll allow the Bitcoin people to explain this, "The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography. A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining."

 
   
The Year of the Bitcoin Part II Top

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The interesting thing about this currency is that no one is really in charge of it - it's sort of self governing. Like the Internet it's a peer to peer network based on cryptography. As of late January 2014 there are 12,319,875 bitcoins in circulation. A single Bitcoin at the time of writing is worth about $850 but it fluctuates (it has been as high as $1,000 USD) - in fact it has increased approximately 6,500 per cent in the last 12 months. However there have been many dramatic ups and downs along the way making it quite unstable.

Why would people use them? One thing that appeals to a lot of people is that it cuts out banks altogether - this means no fees but also for those that believe banks are one of the causes of our current financial woes, this alternative has a revolutionary perhaps anarchical attraction. In some ways it's a little like people using Linux rather than buying into Microsoft's world. Some people have bought them as an investment as they believe their value will rise over time, which given recent increases may be understandable.

How do you get them? Well as mentioned earlier there are now Bitcoin ATMs, but the easiest way is online at a Bitcoin Exchange (a list of exchanges in Canada can be found at: http://howtobuybitcoins.info/ca.html). Or you can buy and sell them locally (https://localbitcoins.com).

Spending them is getting easier as hundreds of small business already accept Bitcoins, and major retailers are starting to come onboard. One major corporation is accepting Bitcoins for shares. As this is a digital currency one 'coin' can be broken down into just about any value, so if you want to buy a donut in a coffee shop you can use your Bitcoin wallet and pay for it virtually.

One thing to beware in the future, is competition. It seems likely that someone will come up with another digital currency that could potentially be more attractive, or user friendly. The other is regulation; although the Canadian government does not recognize it as a legitimate currency it also says that it is not tax exempt - they would say that wouldn't they? And, if the currency does go mainstream then there will need to be some regulation, but how do you regulate something that is open source? These are interesting times for Bitcoins.

 
   
5 Ways To Improve Your Chance Of Getting A Loan Top
 

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From time to time we all need financial help from our bank, or credit union. A growing business needs cash to grow and a business going through hard times requires cash to survive until things get better. Here are a number of things you can do to increase your chances of impressing your bank manager and getting him, or her, to say yes! First things first, you should get to know your bank manager, or if you bank in a large branch, your account manager. If you have never met him/her, now's the time to get acquainted; it's far easier to do business, and get money, from someone you know and who knows both you and your business than a faceless stranger. However, before you make an appointment you need to be prepared. Banks are far happier supporting a business where the owner has a clear understanding of their business, market and industry - go figure!

These five tips will work equally well if you are looking for an investor for your company.

  1. Write a full business plan. All banks want to see a business plan. It is less about the actual document though and more about the knowledge that you have thought through every aspect of the business carefully and carried out sufficient research.
  2. Provide them with full financials. What does this include? You'll need the following at a very minimum:
    • Income statement (some people call this a profit and loss statement).
    • Balance sheet (your bookkeeper or account can help you with this).
    • Cash-flow spreadsheet (this is the document that shows all your projected monthly revenues and expenses for the next 12-months) - they are looking to see whether you are predicting sufficient cash flow. It is the most important document the bank will want to see.
    • Sales forecasts (this provides your account manager with a clear idea of what your sales targets are for the coming year - make these reasonable, because account manager are trained to spot forecast based on wild dreams).
    • The level and value of your fixed assets.
    • The level of security (if the company goes down can the bank get all or some of its money back).
  3. Show you have a management team up to the job. They will be looking at the following:
    • The quality and strength of the management team.
    • The skill of the owner/manager (i.e. you - this includes attitude and entrepreneurial spirit).
    • Continuity (will you stick with it, will trained/specialist staff be retained long term?).
    • Your company's promise and potential for growth.
  4. Prove that there is a solid market for what you sell and that you fully understand both the market and the industry you are in. Your account manager will be looking for:
    • Proof that there is a strong market - e.g. surveys that show customer acceptance of the product or service.
    • Ongoing market demand.
    • An idea of the overall size of the market (they will be looking for a large potential market with a variety of clients; a business for instance which relies solely on government contracts would be seen as a poor risk).
    • Competition proofing (how well you can stand up to your competitors).
    • Your level of understanding of the current local marketplace and an ability to read market trends.
  5. Show that you are in control of management and administration.
    • Your company's efficiency with regards to sales and credit terms.
    • An understanding of the current economic situation.
    • Your level of dependence on suppliers, and reliability of supply.
    • Manufacturing details such as turnaround time and capacity.
    • Your level of dependence on distributors.
    • The level and variety of inventory.
    • The suitability of your location etc.
    • Cost control (they will look for signs of wise, or reckless spending).

There's a lot more you could do to impress the person you hope will be your financial benefactor, but these five key points will start you off on the right foot with whomever you are dealing with and show them you are a professional business person in touch with your business.

 
   
3 Great Business Author's Blogs Top

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There are certain people, in this case business authors, who have a knack of getting to the heart of matters, or giving a nuanced view of business that make them worth listening to or purchasing their books or, in this day and age of instant gratification in bite-sized pieces, reading their blogs.

Here are three such business blogs that have caught my attention and given me food for thought.

Susan Baroncini-Moe

Check out her blog on virtual networking - she extolls the virtue of meeting people for coffee virtually rather than in person. The difference she calculates is that including travel time a traditional networking opportunity can take 4 hours whereas a virtual coffee meeting can take just 40 minutes. In a world where business has few borders virtual networking makes sense. I found this post interesting and plan to do more virtual networking in the future.

From her website: Susan Baroncini-Moe is the author of Business in Blue Jeans: How to Have a Successful Business on Your Own Terms, in Your Own Style, a business and marketing strategist, and a Guinness World Records® titleholder. She regularly speaks to audiences of all sizes and has shared the virtual stage with business giants like Michael E. Gerber, David Meerman Scott, Bob Burg, Larry Winget, and Chris Brogan, among others. She and her businesses have been featured in Redbook Magazine, USA Today, MSN Living, Inc., Fast Company, Investor's Business Daily, Yahoo Finance, and American Express Open Forum.

You can find her here and at www.BusinessInBlueJeans.com

Seth Godin

Godin is an acclaimed Wall Street Journal and Business Week bestselling author. I have his book Purple Cow: Transform Your Business By Being Remarkable on my desk and refer to it often. Now I can get my daily fix of Godin by visiting his blog at www.sethgodin.typepad.com. Recent blogs include one on how to manage conference calls (Conference Call Hygiene), where he states that, "When in doubt don't have one" and that if you do have to partake then limit it to 10 minutes. His blog features short and to the point comments on the vagaries of business life - priceless!

From his website: SETH GODIN is the author of 17 books that have been bestsellers around the world and have been translated into more than 35 languages. He writes about the post-industrial revolution, the way ideas spread, marketing, quitting, leadership and most of all, changing everything. You might be familiar with his books Linchpin, Tribes, The Dip and Purple Cow.

In addition to his writing and speaking, Seth is founder of squidoo.com, a fast growing, easy to use website. His blog (which you can find by typing "Seth" into Google) is one of the most popular in the world. Before his work as a writer and blogger, Godin was Vice President of Direct Marketing at Yahoo!, a job he got after selling them his pioneering 1990s online startup, Yoyodyne.

Peter Shankman

Shankman's recent blog post: Corporate Suicide: How to kill a great customer review of your company reminded me that to work social media needs to be monitored and managed constantly, otherwise you can shoot yourself in the foot big time. It also highlights the importance of getting things right because if you don't hundreds, if not thousands or people are going to hear about it! Take a look at his story and you'll see what I mean. www.hankman.com/how-to-prevent-a-great-review

From his website: PR Week Magazine has described Peter as "redefining the art of networking", and Investor's Business Daily has called him "crazy, but effective". Peter Shankman is a spectacular example of what happens when you merge the power of pure creativity with Attention Deficit Hyperactivity Disorder (ADHD) and a dose of adventure, and make it work to your advantage. An author, entrepreneur, speaker, and worldwide connector, Peter is recognized worldwide for radically new ways of thinking about Customer Service, Social Media, PR, marketing and advertising. - See more at: www.shankman.com/about

 
   
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Chukuni Communities Development Corporation
PO Box 250, Red Lake, ON, P0V 2M0
Phone: 807-727-3275 | Fax: 807-727-3285
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