Toronto – Driving Business Away

I read today two articles about a survey that was recently completed regarding running a business in Toronto. The first was in the National Post (click here for the full article) and the second was on 680 News (click here for that article). Both had the same attitude – the changes that have been occurring in recent years surrounding legislation about businesses has been driving business owners elsewhere.

Both articles are discussing the cause of businesses moving away from Toronto. The easiest answer is taxes – with property taxes continually on the rise, more and more businesses are seeking cheaper offices. Moving from a downtown Toronto location to Markham or Mississauga would mean a decrease in property tax, but the question becomes, at the expense of what.

Toronto currently is still a large center of commerce, and by moving away from the center, some businesses will find that it impacts their clients. While they may save money on taxes, they are not able to retain all their customers. However, most businesses will find that the difference in location is not that significant. There are a variety of offices that are available on a per use basis (for example, Telsec offers daily and monthly rentals of offices). While these offices do look shared, they can help a business maintain a presence in the downtown core, while not costing the full price of an office (assuming that you aren’t renting every day, but only a few times per month).

The city of Toronto needs to realize that keeping businesses in Toronto can be lucrative to the city in terms of increased tax income, but that to keep businesses here, they need to offer more than merely being a center of commerce. While certain businesses are tightly tied to their location, many are not, and if the city continues to increase taxes at astronomical rates while reducing the services provided in exchange, businesses will be heading quickly for the greener pastures.

Book Review – Trust Agents

I just finished reading Trust Agents by Chris Brogan and Julien Smith. If you’re reading this blog, you probably already know the authors from their wide-spread online presence. If not, check out their blogs, from where you can find more information about them (for Chris’ blog, click here; for Julien’s blog, click here).

I would first like to thank both Chris Brogan and LinkedIn – this book was sent to me as part of winning a contest on Twitter several weeks ago. There were no strings attached to me getting the book. However, I enjoyed reading the book, and so decided to write a review of the book.

In order to understand my perspective on the book, I need to take you back to when I was first introduced to Chris. My friend and colleague Jeremy Lichtman started a friendly competition on his blog on January 1, 2009 (read the post here) to complete Chris’ list of 100 blogging topics, and on January 12, I decided to take him up on the challenge. At this point, I had never heard of Chris Brogan.

Fast forward a few months, and I had become a regular reader of Chris’ blog, and soon signed up for his weekly newsletter. I’ve had a couple of e-mail exchanges with him on various small topics relating to his newsletter. Then the book came out, and I was immediately intrigued by the title, and when he posted the competition in conjunction with LinkedIn, I submitted my entry (click here to see my post), and was pleased to see that I had won.

The way I had won the book in the first place demonstrates how appropriate it is that I read the book. Chris and Julien wrote about establishing trust online, and clearly, I had already been involved with establishing trust with Chris himself. Many of the lessons they wrote about I already knew, but never thought about in a conscious manner. Trust takes time to establish, but can be destroyed in seconds. Most people know this, but don’t think about it.

The book was easy to read and well-written, flowing smoothly between topics. The objectives of the various points were well laid out. If you read Chris’ newsletter (and if you don’t, I recommend you sign up here), then you’ll be familiar with the style.

From a content perspective, the book did not teach me anything new per se, but rather promoted critical thinking about how and why online relationships work. Having completed the book, I do not believe that I am now a trust agent – rather, I understand more about the side effects of the various actions I do online. I understand the power of the masses, and how it can be harnessed for mutually beneficial purposes. I understand the difference between asking a friend for a favor, and getting your friend to offer the favor before you ask.

Most of all, I now understand the path I am on (after all, if you are present in several online communities, you are involved in establishing trust at some level), and what I can do to ensure that I don’t have to learn all the lessons the hard way, and how I can be sure to apply established rules to increase my circles of awareness and acceptance as rapidly and smoothly as possible.

If you blog, or interact in any manner online, I strongly recommend that you read this book. It will explain to you much of what is happening to your relationships as you progress in your online involvement.

New FTC Regulations

The Federal Trade Commission (U.S. agency for my non-American readers) released its official guide to those receiving goods or services in exchange for endorsements. According to the official title, it affects advertisers, bloggers, and celebrities endorsing a product (click here for the full report). The guidelines include, among other things, that the person making the endorsement disclose that they are being compensated for what they write. The details are a bit vague, but we can be sure that over time, the FTC will continue to refine this guide until it is a full-fledged regulation.

There are multiple potential impacts to this, some for good, others, not so much.

First, I held a debate a while back over whether or not bloggers should be disclosing that they are being compensated for the reviews they give (which is the basis of the FTC guidelines). The conclusion we reached was that while bloggers should be pointing out somewhere that they receive compensation for their reviews, they should not need to disclose this on each individual review they write. This lets their readers be aware that they may be biased on this account, and to value the review accordingly.

Second, there are tax considerations – when you receive compensation for work done, you have to report that as income. Robb Sutton pointed out to me in his article, published yesterday, that in the U.S. this reporting is only required if the paying company provides the appropriate paperwork. I find this to be a little odd, since in general, you have to report income regardless of whether or not the employer is filing his paperwork correctly, and I therefore suspect that it is only a matter of time before this ruling is changed to match.

Jeremy Schoemaker writes about this as well, and points out who was the cause of such regulation. The regulation is aimed to prevent a company from creating a fake blog where they review their own products. Since they would now have to report the compensation taking place, readers would then be aware that the site is merely a front for the company itself.

Except the regulation doesn’t quite pull that off. The company can now pay someone to set up a blog for them where they review the product and admit that the writer was paid for the review. This will cost them a small amount per review. Alternatively, they can risk running afoul of the FTC regulation by not admitting the bias, and be fined $10,000.00 [per violation]. However, this sum is not enough to stop a company from using fake blogs to advertise their products – such a site could easily generate $100,000.00 in profits from sales to its readers. Combined with the fact that the FTC will be unable to catch every violator makes this risk acceptable to some.

In summary, while the regulation in general is a good thing, it is not clear that the FTC has a road to its goal (namely, getting rid of fake blogs reviewing products and making outrageous claims). As the regulations and guidelines are refined, we’ll see if the FTC can figure out how to get where it’s going.

Book Review – Once You’re Lucky, Twice You’re Good

On the recommendation of my friend and colleague Jeremy Lichtman, I just completed the book “Once You’re Lucky, Twice You’re Good” by Sarah Lacy, which is about the rebirth of Silicon Valley and the development of what is now known as Web 2.0. It was an excellent book, prompting me to write this review.

As an aside, while I am a passionate reader, often reading as many as 5 books simultaneously, I have never written a book review before. Hopefully, however, this will become a habit, and I will try to write a book review at least once per month in the upcoming months.

The book was a fascinating read. Sarah has successfully described not only the success of the various entrepreneurs who were actively developing new sites in the post-dot com era, but also their motivation, and what differentiates them from their predecessors. The book provided insight into the psychology of the new generation of developers, their past, their motivators, and their ambitions.

The book was not cut and dry, but an excellent interactive read. Modeled after the websites developed by the subjects of the book, Sarah engages her readers in the decisions of her subjects, the debates they held with themselves, the factors involved which motivated them to succeed.

She writes about Max Levchin, the founder of PayPal and Slide, and an investor in Yelp. She talks about where he came from, what motivated him to succeed at that level. She discusses his fears, debates, and decision-making process. Read about Mark Zuckerberg, the founder of Facebook, and how he turned down an offer of $1 billion from Yahoo in June 2006 (a wise move, as it would turn out, with a current estimated value exceeding $15 billion). Read about the people who helped them, who were there to teach them the lessons they learned during the dotcom bubble.

All in all, this was a fantastic book, and a must read for anyone who is thinking of developing a piece of software or an online platform, as it will teach you many of the lessons that have been learned during the last decade.

KNIRL.com Published

If you haven’t seen the site yet, check out http://knirl.com and let me know what you think. Hey, you can sign up for the newsletter and I’ll send you updates as they become available (and no, I won’t send you spam, and will let you remove yourself from the mailing list, and no, I won’t give away your e-mail address to anyone).

Goal Setting for 5770

I wrote an article several months ago (back in January, to be precise) about my goals for 2009 and the importance of having goals. You can read that article, which is fairly short, here. As today is the first day following Yom Kippur, the Day of Atonement in Judaism, I thought I would look back at those goals, and share a few additional thoughts on the general idea of having goals.

First, an update on the status of my goals. As I wrote in the previous article, my goals for 2009 were to:

  • Complete all outstanding contracts and move into the maintenance stage of the software lifecycle with them
  • Pick up one new contract per month which can be completed in about that amount of time and then turned into a maintenance contract
  • Take a few courses that would expose me to new technologies
  • Continue to learn C# and become familiar with the .NET framework to a level where I would be considered “competent”

In order, I have managed so far to achieve the following:

  1. I have only one outstanding contract which is not in maintenance mode, and it should be in maintenance mode within another month or so
  2. I have not managed to pick up many new contracts, but have picked up a few, and the pace is rising, though slowly
  3. I have learned a little bit about a variety of technologies in the recent months, although I have not taken any courses
  4. I have developed an application in C# (a full enterprise-scale application) and am continuing to develop my C# skills, and have developed some level of competency, although I would like to continue developing that competency

Goals are important because they help us define our path in advance, to provide us with an end to strive for. Creating goals also allows us to reflect on the past, and how we have managed to perform.

A downside to setting goals is that on reflection, we may realize that although we had many high and noble goals in the past, they were quickly forgotten. How many New Year’s resolutions are completed versus those which are forgotten or abandoned? While I don’t have a precise number, my suspicion is that people’s performance in general is not very impressive. This can be quite discouraging when setting goals – why should you bother, if you’re past shows that you aren’t likely to reach those goals?

I believe that one of the primary reasons that people fail to achieve their goals is because they fail to perform the second half of setting goals, which is to create a road map to reach those goals. Making a goal to spend more time with your family, for example, sounds great and impressive, but if you have a packed schedule to begin with, it may be impossible to achieve that goal. If, however, when setting that goal, you create a way to achieve it, for example, you commit to getting up 30 minutes earlier each day to free up some time later in the day, then you are more likely to reach that goal.

What are your thoughts on goal setting? How do you set yourself up to succeed in reaching your goals?

From Idea to Capitalization

I’ve been working on an idea over the last few weeks to develop a new product along with several other people. As the instigator of this project, I have been learning a lot about how an idea moves from concept to production, from burning money to profitability, from unheard of to world famous.

I have also been reading several questions on a variety of sites posed by people in a similar situation to myself – they have an idea, but no money to bring it to fruition in the real world. The questions tend to focus on team building and raising capital. The questions also indicate a lack of information on the process by which many start-ups have become successful. I am fortunate to be working with a colleague who has past experience in this field, and has been guiding me as I develop my own idea into a profitable business.

In light of the information I now have, I thought I would put up a basic checklist of steps to go through when developing a new product or service:

  1. You think of a new idea for a product or service, so you write it down. Talk it over with someone else (be careful about confidentiality, and have that person sign an NDA if you think it is warranted) to make sure that you get an objective opinion about your idea.
  2. Write down a short description of your idea. Explain what it is, who wants it, and who will pay for it. Do some basic market research to figure out what alternatives are currently available, and how much they are charging. What are people saying about your [potential] competitors? Briefly describe the business model for your new business (how will your business generate revenue). The entire description as outlined here can be short, perhaps a mere page or two.
  3. Figure out what it will take to build your product or develop your service. Determine what the bare minimum is that you will need. Remember that if you believe in your idea, you should be prepared to take a risk, in that you will not be getting paid until your idea earns money. You don’t need a fancy office, or top-of-the-line equipment from day 1. This can be ramped up later. Work from your home on the old Pentium 2 that you never bothered throwing out. Buy equipment used when you need to.
    You need to remember that anyone investing in your idea will expect you to be responsible with the money, to save it when you can, and shop around for the best prices. You need to keep accurate records of your expenses and revenues. If you need some expertise that you personally don’t have (i.e. to hire someone) see if you can trade them equity to help you with the work, or accept a deferred payment.
  4. Start building the product. Start writing a business plan (this can take over 100 hours to complete, and you will need it if you look to borrow money from the bank, or talk to an angel investor).
  5. When you reach the point at which you need outside funds (for example, you have a legal bill for $5000 to incorporate your business and to handle your copyrights and patents, plus a $25,000 bill for equipment that is absolutely required, plus a $15,000 bill for marketing about to be incurred), figure out how much money you absolutely need, and add 20% as a contingency. Then use the following guideline to figure out who to talk to:
    • $0 – $50K: Talk to your bank, family, friends. Can you get a loan, or a line of credit? This will likely be the easiest and most cost-effective way to raise these funds. Beware of mixing family and business when borrowing from friends and family, though. You will be really unpopular if you borrow money from a friend and then your business collapses.
    • $50K – $500K: Look for an angel investor. You will have to give up equity in your business for this, and be prepared to have someone looking over your shoulder constantly to see how you’re spending the money. Also remember that this is the first round of investing. If you give up too high a stake in your company at this stage, you may face difficulties later on when trying to raise more money.
    • $500K+: You have entered the world of venture capital, and will need to read more detailed information on how to work with a VC. There are many excellent resources available online for the uninitiated.
  6. Now that you have the money you need, finish the development, launch your product or service, and market it. Initially, take the revenues earned (all of them) and use them to develop your idea further, to improve your product, to increase your visibility in the market. Once you have a steady revenue stream, you can then think about hiring yourself to do more work on the idea, paying out a divided (which implies profitability) or upgrading your public appearance with fancy offices. However, before you do that, if you owe money for a loan or line of credit, make sure you pay that back first.

By no means are these steps to be taken as a bible. However, you may find this useful if you are thinking about starting your own business, or have an idea that you think might be viable as a means of earning money.

Business and Social Media – Part 4

This is the final installment of the social media series, which started with the post on August 7. There was to have been a post last Friday, but life sometimes gets in the way. I’m curious to know what you thought of the series – how might it have been improved, what additional topics should I have discussed, did I make some errors. Please comment and let me know.

I apologize in advance for what is about to happen. I’m going to be separated from the internet for about 10 days. So if you post a comment, it may take until I get back for me to respond. However, I will respond when I get back.

Recap

When I left off the series, our model business owner, Jane, had started a blog which she uses to hold directed conversations with her readers. She has also started a Twitter account which she uses to post news and links to her articles, and uses the account to see what topics are of interest to people, and then writing about those topics.

Facebook

The largest problem with blogging and Twitter is that conversations are generally one-sided. Jane acan pick a topic to discuss, and interact with her audience regarding those topics. Using Twitter, she can respond to short questions. What she cannot do (yet) is allow her audience to pose its own questions, to hold undirected conversations.

This is where the networking sites such as Facebook and Linked In become important. Both these sites allow groups to be created. The creator of the group can act as an administrator of the group, and encourage conversation and participation among the group’s members. However, each member can start a new conversation, a new discussion, on a variety of topics. They can ask questions.

This will put Jane back to the first stages of becoming involved in social media, in which she interacts directly with her audience, as a member of the audience, but now Jane is in control of the environment. She can market the sites to people who come to her store. She can start getting feedback from her customers on topics she didn’t realize were issues.

Conclusion

Social media is about personal interactions used as a means of promotion. The fundamental component of social media is interactions. Social media is built on socializing. In order to run a successful campaign, you must interact with your audience – respond to their questions and comments, start conversations, ask questions of your own. Everything else is merely a tool to help you interact.