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Societal Impact: Moving From “Nice-To-Consider” To “Business Imperative”

Over the past few years, societal impact has been growing as an area of interest for businesses. Business leaders, myself included, have voiced the belief that businesses should have a purpose beyond profits, and uphold a responsibility to society and the environment.

Although this school of thought is sometimes met with skepticism from those who doubt the commitment of businesses to do good, there is new research suggesting that businesses are actually taking significant action to improve their impact on society and the environment.

According to a new report from Deloitte Global, societal impact has become the most important factor organizations use to evaluate their annual performances, outranking financial performance and employee satisfaction. These findings are based on a survey of more than 2,000 C-suite executives across 19 countries. This shows a shift, even just from last year’s survey report, in which executives expressed uncertainty about how they could influence the direction of Industry 4.0 and its impact on society.

What is driving this change? There is no one answer. Almost half of executives surveyed (46 percent) reported that their efforts have been motivated by the quest to create new revenue streams, and a similar percentage said that initiatives that have a positive societal impact are necessary for sustaining or growing their businesses. An organization’s cultures and policies were also cited as motivation (43 percent).

External pressure continues to be a major driver as well. According to Deloitte Global’s series of inclusive growth surveys, some of this drive comes more from public sentiment, which is increasingly influencing business leaders’ decisions related to societal impact by encouraging them to reevaluate their strategies.

Purpose in action

When it comes to societal impact, businesses are beginning to put actions behind their words. Seventy-three percent of surveyed CXOs report having changed or developed products or services in the past year to generate positive societal impact. What’s more, 53 percent say they successfully generated new revenue streams from these socially conscious offerings.

While some leaders have started to see profits from positive societal goods and services, there is disagreement over the question of whether initiatives meant to benefit society also benefit bottom lines. Fifty-two percent see societal initiatives as generally reducing profitability; 48 percent said that such initiatives boost the bottom line.

Despite these concerns, leaders report a commitment to initiatives that benefit society.  There’s probably a short term vs longer term element in this regarding the sustainability of business which may have influenced the answers.

Strategically integrated

Beyond products, services, and new revenue streams, leaders are integrating societal impact into their core strategies. Executives say they have been particularly effective preparing for the impact that Industry 4.0 solutions will have on society. They’re also building external partnerships and joint ventures, and strengthening ecosystem relationships to make a greater impact.

Whether driven by finding new sources of revenue, or the need to respond to external pressures, businesses across all industries seem to be moving towards improving their societal impact. It is heartening to see that leaders are incorporating these considerations into their strategies, as well as operations. When societal impact is seen to be an integral part of a business’s makeup, the most meaningful results can be achieved.

To learn more read, “Success Personified in the Fourth Industrial Revolution: Four Leadership Personas for an Era of Change and Uncertainty.”

David Cruickshank was elected into the role of Chairman of Deloitte’s global organization, Deloitte Touche Tohmatsu Limited, in June 2015 having served on its Global Board for eight years from 2007. Prior to this, he was Chairman of the UK member firm from 2007-2015. He is a Chartered Accountant and a graduate in business and economics from the University of Edinburgh. David is co-chair of the World Economic Forum’s Partnering Against Corruption Initiative and a Board Member of the Social Progress Imperative.

Source: Societal Impact: Moving From “Nice-To-Consider” To “Business Imperative”

Today, many firms are active on social media, but not all of them are experiencing transformational change and return on investment. Why do some businesses succeed, while others fail? Join us for a fireside chat on why Social Business has become too important to delegate completely to a junior social marketing team and why going forward, CEOs, CMOs, management teams, and boards must personally own and drive Social Business strategy and re-architect traditional business models and client engagement models.

Fireside chat with Clara Shih, CEO and Co-Founder, Hearsay Social and Kristin Lemkau, CMO, JPMorgan Chase.

 

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How to Start a Business in 10 Steps

A little less than two-thirds of Americans want to start their own business. Perhaps surprisingly, this is true among both younger and older workers. Like the drive to write a book ( 81% of Americans) or work as a full time freelancer (soon to be half of all workers), starting your own business is a widely shared dream.

For good reason. People who work for themselves tend to love it. Although it comes with the complexity of having to manage every piece of an operation, as well as the stress of knowing that success rides completely on your own shoulders, there’s nothing quite like being your own boss.

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It’s also very possible. Here’s how.

1. Research Your Market

This guide will assume that you already know what your business will do. If not, we have an excellent guide to coming up with your small business idea here.

Once you have your idea set, you need to do your research.

Starting your business will inevitably be a learning experience, but you want to get as much information as you can beforehand. So take some time to study your planned market. Ask questions like:

• What kind of competition will you face?

• Who is your target consumer?

• Where will you locate your business?

• What are the logistical and practical concerns about that location?

• What do consumers like and dislike about the existing market for your product?

• What do consumers say they want right now?

• What kind of spending power does your target consumer have?

Your market will be different depending on the nature of your business venture. A corner store has entirely different demographics and challenges than a web-based service vendor. In both cases, though, it pays to know your audience. Literally.

2. Write a Business Plan

The business plan is the blueprint for your company. It’s where you’ll apply your research and planning into one document that describes in detail the who, what, when, where, how and why of your new business. In it you will address issues such as:

• Who you will market to;

• What you plan to sell;

• When you anticipate hitting certain benchmarks, your timeline for development;

• Where you will locate this business, whether online or brick and mortar;

• How you will operate this business day-to-day;

• Why this business, what opportunity did you see in the market.

Your business plan should also address critical issues such as:

• Monetization and cash flow. How do you anticipate making your money and turning a profit?

• How much will it cost to run this business? Don’t miss the details.

• When do you expect to become profitable?

• Specific challenges you anticipate and how you will overcome them.

• What will it take, step by step, to operate this business and create this product?

The business plan article linked above goes into more detail, and the Small Business Association has a template here. Both are worth reading in further detail, because starting a business without a business plan is like setting off on a road trip without a map or GPS.

And, of course, don’t forget to pick a terrific name.

3. Get Feedback

Now stop.

Writing your business plan should be exhausting. This should be a detail-oriented document that takes a hard look at your planned venture and how, precisely, it will work. If you’ve done it right, by now you should be ready to tear into the building phase of your new business.

Instead, take a step back and solicit feedback. Call friends, family and colleagues who might have some knowledge of the industry you’d like to enter. Seek out mentors or professional guidance if possible. Get their opinion of your business plan. They might have questions you didn’t think of or notice something that slipped by you.

Hopefully this business will be around for years to come. You can afford a small delay while you get a few more eyes on your proposal.

4. Find the Money

Cards on the table, this is the hardest part for most entrepreneurs.

Not every business needs a lot of startup capital, but you will almost certainly need some. How much will depend a lot on what you want to do. A web-based services firm might require very little in the way of funding, while a retail store can require a substantial amount of cash to pay for rent, inventory and staff.

Regardless of how much, now is when you need to find this money.

This is something every entrepreneur faces, and small business owners turn to a variety of sources for startup capital. No matter where you get funding, expect to invest at least some of your own money. Lenders and investors will want to see that you have “skin in the game,” to use industry speak. Beyond your personal accounts, called self-funding, small business owners also rely on:

Bank Loans

Many businesses start with a small business loan from local banks.

You will need to have all of your paperwork in order to pursue a loan. Expect the institution to ask for details from your business plan, including monetization strategy and financial projections. If you have trouble securing a loan, you can turn to the Small Business Association which runs a loan guarantee program to help make this type of financing more accessible.

Personal Loans

While not an option for every entrepreneur, many people do rely on loans from family and friends.

If possible this is typically better than securing a loan through the bank. You’ll likely pay little interest and will have more generous terms in case of default. However, it also depends on knowing people who have that kind of cash lying around.

Grants

While not lavishly funded, programs such as Grants.gov operate small business grants for entrepreneurs.

Investment

Professional investors typically look for potentially large-growth business opportunities. Depending on the nature of your intended company, this could be a good fit for you.

A venture capital firm is unlikely to sink money into a small legal practice or restaurant. These tend to be low-growth relative to the returns that they seek. However, someone looking to launch a new product or web-enabled service, something with high potential scalability, might be a good fit for the private investment model.

Local angel investors, such as those found through AngelList, are more likely to invest in a regionally focused business. While beyond the scope of this article, you can learn more about finding private investors here.

Crowdfunding

Crowdfunding has become an increasingly common source of startup capital for small businesses. This model tends to reward retail style projects (someone looking to create a specific thing that catches the public’s eye). It can also be an excellent way to hone your sales pitch to a general audience.

For more information on financing, the SBA has a comprehensive information sheet on common sources of funding here.

5. Choose a Location

Where you locate may determine some of your legal obligations and paperwork, so it’s best to get that done at this step.

As much as possible you should try and do this with specificity. While you’re not ready to sign a lease just yet, the closer you can come to a specific address the better. Meanwhile, if you’ll be starting this company online, now’s the time to pick up your domain if you haven’t already.

Pay attention to local laws! We cannot overemphasize this. The best location can be killed off by a zoning ordinance that makes your business illegal on that particular street corner. Municipal laws can be petty and confusing, so make absolutely sure your business is street legal.

6. Establish Legal and Tax Structures

If at all possible, at this step you should retain the services of a lawyer and/or accountant. You will absolutely want professional advice. Otherwise, you run the risk of missing details that come back to bite you down the road. We also must note that nothing here constitutes legal advice. This is just a general primer on what you need to know.

Now is when you’ll actually begin forming your business and filling out the necessary paperwork with federal, state and local governments. This can involve (but is not limited to):

Choosing Your Corporate Structure

There are many types of businesses you can form, including LLCs, S-Corporations, partnerships, sole proprietorships and more. Those listed here are the most common corporate forms for a small business. The right one for you will depend on issues like cash flow, number of participants and how you want to structure potential liability. You can read more about this issue here and here.

Register Your Business

How you have to register, and with who, will depend on your specific corporate form. However, if you have formed a corporation of some sort you will have to file articles of incorporation to create this legal structure. For more information on registering your business, see this resource.

Register With State and Federal Tax Agencies

You will need a tax number and may need an employer ID number. The SBA has a guide to finding and filling out your appropriate tax forms here.

Determine Any Licenses and Permits That You Need

Depending on the nature of your business, you may need a license to operate. The SBA has a database of federal and state licensing requirements here.

Be certain to also look up zoning and location-based regulations. You may need additional permits based on where you’ve chosen to operate your business. These are typically a city-level concern.

7. Open Bank Accounts and Sign Leases

Once your business has been properly formed you can begin to act in its name. Now is when you can start actually executing on many of the opportunities you’ve already lined up.

Open bank accounts in your new business’ name. Take out a corporate credit card and, if your bank offers it, work to pre-establish a line of credit. You will find this easier to do now that your company exists and has established funding, although it may not become an option until you have operated for some time.

Go out and actually get the funding you secured earlier, because now you have someplace to put it. You should have already gotten the “yes” by now from someone, but you don’t want to deposit corporate seed money into your personal checking account. This may technically constitute a felony that rhymes with “schmembezzlement,” and is poor form either way.

With the money in hand and a functional checkbook, now is when you sign the necessary leases on real estate.

8. Take Care of Little Details

Once again step back and take stock, because the best ideas can be broken by the smallest details.

Make sure your business has comprehensive insurance for issues ranging from fire to property damage and legal liability. Many business owners overlook that last issue, and it can be a career killer if someone slips and falls or even just decides they don’t like you.

If you will hire employees put a documented process in place for hiring and firing. Have your workers compensation and unemployment insurance paperwork filed and in order.

If you haven’t already, talk to both a lawyer and an accountant. This is especially critical if you will employ people. Even if you don’t formally retain an attorney, buy a few hours of an employment lawyer’s time to make sure you have your bases covered. Figure out how your business will do its accounting and have that system set up and operational, whether you’ll do it yourself or have hired a professional.

9. Start Making Things

Now, at long, exhaustive last, we get to the fun part. It’s time to start actually making things.

You have the money, you have the location. You have all of your paperwork filed and are legally bulletproof. Now begin making your product.

How you do this will, obviously, depend entirely on what you specifically do. A manufacturing company will need to source suppliers for raw materials and the necessary machinery. (Because you took our advice and checked out all the local laws you won’t need to worry about any noise complaints from the neighbors.) A retailer will source vendors and set up an inviting, fun storefront. A consultant will finish making her office look tasteful and professional.

A restaurateur should stock the kitchen, buy appliances and write out a menu.

The details of getting to work depend entirely on your industry and profession. Fortunately, you’ve got a well written business plan for figuring out what those details are. Whatever you do, though, now’s the time to start actually doing it.

10. Scale and Hire

Your business is operational. Now’s the time to think about how to keep the lights on.

Some businesses will require employees from the very beginning. A cafe, for example, is almost impossible to run alone. Those employees are part of your startup costs and will be with you from the very beginning. As your business grows you may have the luxury of hiring more people to take some of the work off your plate.

Now is also the time to begin marketing.

To be fair, this is something you should be considering all along. You should always think about how to get your business’ name out into the community. Don’t let up once the doors open. Look to social media, advertising, foot traffic and local networking to get people in. Talk with other businesses in the area about collaboration efforts.

This is where you get to be creative. This is the fun part of being an entrepreneur. If you’re at step 10 you’ve earned it. So enjoy, because this is your business.

Source: How to Start a Business in 10 Steps – TheStreet

He Sold His First Business To Google And Just Raised $120 Million For His Next Startup

Ray Reddy

Ray Reddy has raised millions of dollars in startup funds, sold a company to Google and is taking on the local business gauntlet in an innovative new way. Yet, he chose to exit Google and Silicon Valley to launch his latest venture.

In his exclusive interview on the DealMakers Podcast, Ray Reddy shared the pros and cons of the valley and his fundraising strategies.

The Art of Business

Always curious, Ray wondered if business was like math and science.  He attended the University of Waterloo to study computer science, then a Masters of Business and Entrepreneurship and Technology.

He says he learned some good foundational principles, how to approach complicated problems, and how to learn quickly. Yet, when entering the business world he found that very little of what he learned had any practical knowledge of applicability. He says “it’s much more about common sense and experience than it is about definitive approaches and how to solve some of these problems.”

After school he went straight into corporate strategy at BlackBerry, doing M&A and venture investments. Yet, he has always not only had a lifelong craving for learning, but a passion for building something and building something that he found had a purpose.

What Google Gets about M&A

The mobile phone was starting to consume other portable electronics. It quickly began to absorb portable navigation, portable GPS, handheld units, and portable media players. Yet, no one seemed to be addressing it. Ray Reddy decided to go solve it himself and built a team of people to go after it.

That startup became PushLife.

Prior to the iPhone, they focused on building an experience that made it very easy for people to move content back and forth between their phone and their computers, specifically music. It took normal phones, and it gave them an iPod-like experience on Android, BlackBerry, and Nokia. PushLife ended up licensing software to major carriers.

It was so successful it was acquired by Google. After the acquisition, he was at Google for four years. First in the Canadian Google office in Waterloo. Then out in Mountain View at Google‘s headquarters.

He ended up running the mobile commerce team for one of their products. Then towards the end, Ray was actually part of the launch team for Google Shopping Express, which was their same-day delivery effort in retail.

The difference with companies like Google, according to Ray, is that they do hundreds of acquisitions a year. They really turn it into a mass production factory. It’s very organized. There are no games. They are very straight-up. From Ray‘s perspective, it doesn’t feel like anyone is trying to overly optimize a negotiation. It makes a lot of sense because the transaction is the beginning of the relationship.

Ray‘s opinion is that Google‘s M&A process is designed in a way to get a group of people that are energized and that deliver a lot of value over the upcoming years. Contrast that with some other acquisition approaches and the result is quite different.

Eventually, Ray found a big new problem to solve. He ultimately concluded that structurally, a big company wasn’t set up to solve this problem, even with all the resources a company like Google has.

Toronto vs. The Valley

Ray moved his founding team to Toronto. Not that the Valley isn’t a really interesting place. He says “On one hand, it is the capital of technology worldwide, but I think there’s also some really weird dynamics there.” The biggest one being that you’ve got a very high concentration of very wealthy people, and they’re all early adopters.

He points to the collapse of the entire on-demand space, everything from on-demand valets to cleaning services several years ago, and a massive false-positive from the Valley.

Because when you have places like Palo Alto where average household incomes are north of $2 million, you can fool yourself into thinking that there are enough people who will pay a big premium for convenience.

As Ray states, “the types of investors living in the Valley are not at all sensitive to paying a $10 delivery fee for having a $10 item brought to them.“ That doesn’t seem weird to them. When you look across average neighborhoods and cities in North America, that’s not necessarily true. You lose sight of that in the Valley. You lose sight of the average person.

Ray says “So, if you’re trying to build a mass market consumer product, you just have to be very careful of false-positives that can come from something working in the Valley“

Then the team went and looked at the reality of building talent there, and hiring, and cost, and a lot of those other things. They decided to move to Toronto instead.

Fundraising Strategy

Ray’s latest startup is Ritual which is a social ordering app that taps into networks of co-workers and colleagues for fast and easy pick-up and pay at a wide variety of local restaurants and coffee shops.

He has already raised $120 million in capital. Greylock led the Series A out of the Valley. Insight did the Series B out of New York. Georgian Partners led the C round out of Toronto.

Rather than waiting until funds are imminently needed to close a round, he says “I think about it differently which is you should always be talking to investors. Always having an ongoing conversation with investors.”

He’s always talking to the next stage of investors and trying to build that relationship. Fundraising comes down to trust, and do they trust your judgment? Do they trust that you can do what you say you’re going to do?

For Ritual, it’s never been about the investor that gives the highest valuation. It has been about who do you want to work with and who do you want to build this company with and spend time with.

He’s had a relationship with each one of those investors for about 9 to 12 months before the round. When it came time for fundraising, it was a no-brainer each time.

Today Ritual has a team of about 300 people globally.

Listen in to the full podcast episode to find out more, including:

  • The process of selling your company to Google
  • Benefits of launching in cities outside of Silicon Valley
  • Ways to build relationships with investors
  • Success factors behind marketplaces
  • Retention as the critical factor for ultimate success in business

Alejandro Cremades is a serial entrepreneur and author of best-seller The Art of Startup Fundraising, a book that offers a step-by-step guide to today‘s way of raising money for entrepreneurs.

I am a serial entrepreneur and the author of the The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley

Source: He Sold His First Business To Google And Just Raised $120 Million For His Next Startup

He Left The World of Traditional Employment And Built a Million-Dollar, One-Person Business

Image result for Anthony Martin, 36, has created financial freedom for himself that many people can only dream of.

Anthony Martin, 36, has created financial freedom for himself that many people can only dream of.

He generates $1 million in annual revenue at Choice Mutual, a one-man insurance agency he founded, by selling a very specialized niche product: final expense insurance. It covers burial expenses, so someone’s family doesn’t have to pay the costs, with a payout that is typically in the range of $10,000 to $30,000.

Six years ago, Martin’s life was very different. Working as a manager at an insurance agency in Roseville, Calif., Martin wished he had more control over how things were done. He eventually realized what he really wanted was to be his own boss. In 2013, he took a leap of faith and started the agency from his home.

Martin is one of a fast-growing cohort of entrepreneurs who are breaking $1 million in non-employer businesses, the government’s term for those that have no full-time employees except the owners.

The number of nonemployer firms that generate $1 million to $2.49 million in revenue rose to 36,161 in 2016, up 1.6 percent from 35,584 in 2015, according to the U.S. Census Bureau. That number is up 35.2% from 26,744 in 2011.

So how did Martin grow his agency to $1 million? Recently, he shared his strategies with me. Many of his approaches are instructive for anyone who is selling a consumer product or service online.

Here’s how he pulled it off.

Focus on an area you already know well. It’s easiest to get a running start in a new business if you have already worked in the same industry. By the time he went into business, Martin had already racked up years of experience selling final expense insurance, so there was no need to get a crash course. It was easy for him to explain his product to customers because of that. “I have a very thorough understanding of all of the options out there,” he says.

Find an efficient way to attract customers. Although Martin knew his product well, he didn’t have experience in marketing, so he sought outside help. He hired a company called SellTermLife.com to build a website for him that would rank well in Google and help him get leads, through a customized marketing plan. He put up the website in June 2016.

Even with expert assistance, it was slow going at first. “It took me six months before I got a single lead from Google,” he says. Nonetheless, Martin kept showing up at his desk every day to build up his website. “You’re really going for a long-term play,” he says.

It took stamina to stay committed during those early months. The battle to get market share wasn’t the only one he was waging. For entrepreneurs, he believes, the real fight is to keep showing up for your business, even when it would be easy to slack off. “The majority of the fighting you’re doing is completely against yourself,” he says.

After Martin got his first lead, his momentum accelerated. Two months after that, he started getting daily leads through his site—and now it brings in many more. “It feeds me a never-ending flow of ready-to-buy customers,” says Martin.

Offer top-quality content. In working on his marketing plan, Martin had learned from the team at SellTermLife.com that it was important to publish high-quality, informative content to attract people to his site. As readers clicked on practical articles he wrote on topics such as state-regulated life insurance, life insurance for 89-year-olds and buying insurance for your parents, the site gradually built a strong organic rank in Google.

Here again, sticking with a niche subject he knew served Martin well. “You cannot find another website that sells this type of insurance that has anywhere near the level of in-depth, accurate information about this product,” says Martin.

Creating robust content took a serious investment of time, given that Martin did not have a writer on retainer. Every day during the week and for five to eight hours on the weekends, he’d create articles that address commonly-asked questions about final expense insurance. The articles attracted people who were already seriously interested in his product and also helped him to “own” certain search-term keywords, including “long-tail” phrases—such as questions customers might type into a search engine.

To figure out which keywords mattered most,  Martin researched which ones were most commonly used, relying on tools such as Google’s keyword planner and SEM Rush. He also tapped his own knowledge of the field. “After selling this type of insurance for so long, I know the words people use,” says Martin.

Automate your leads. Martin’s site enables people to “request to apply” for the insurance by filling out a form. By the time a prospect has filled out the form, Martin knows he or she is serious.

To avoid losing track of these leads, Martin set up his site so the leads automatically go to his customer relationship management (CRM) system. Once it feeds him their contact information, he reaches out by phone, prioritizing the newest leads. “The person who has submitted a lead most recently is always the best person to call,” he says.

Thanks to this system, Martin never has to chase anyone down to get them to listen to a sales presentation. “I’m in a really unique situation in the world of selling insurance,” says Martin. “I actually don’t really sell anymore. For all intents and purposes, I’m more of a cashier. I just take orders.”

Embrace remote work. Many insurance agents spend a good part of their day driving to and from appointments with customers. Not Martin.

When customers decide to buy, Martin guides them by phone through a remote application process that the insurance companies have put in place. Sometimes customers sign documents using a program such as DocuSign. Other times, they use a voice signature on the phone.

Working virtually in this way helps Martin make the most of his time every day. “I’ve never met a person face to face to process the deals,” he says. “It’s all done remotely.”

Stay focused. Some of Martin’s contacts have recommended that he sell Medicare supplements or cancer plans. He always says no. “The reason I’m really successful in this space is I have been hyper-focused at being the most expert authority you can imagine on this type of insurance,” says Martin. When he gets an inquiry from someone who wants to buy insurance outside of his niche, he refers the prospect to a trusted industry colleague.

Martin does not look for reciprocal referrals, finding that leads that arrive this way are generally not as inclined to buy as the prospects who come in through his own website. “Right now if I had to choose between serving a customer who has said ‘I’m ready to apply. Please sign me up,” or a referral who has a question, I’m not going to make as much money from a referral,” he says. “That’s why I tell people ‘Don’t refer people to me.’ I allocate my working hours to people who are ready to sign up.”

One thing that helps Martin attract business is having a large number of positive online reviews. He requests reviews from customers automatically using TrustPilot’s automated system.

Keep overhead low  Martin started out working from home in Roseville, Calif., but when his website traffic started to increase dramatically in March 2017 and he saw the business’s full growth potential, he realized there would be tax advantages to locating to Nevada, which has no state income tax. Licensing costs were also lower. He rented an office there for $2,500 a month.

Having the space is important because soon, Martin believes, he’ll need to hire other agents. “I have so much web traffic and so many leads that if I want to continue to monetize a lot of what is possible, I will have to hire agents to process those deals as well,” he says.

In the meantime, Martin keeps the rest of his overhead to about $500 a month. That covers his errors & omissions insurance, licensing fees and CRM subscription.

 Protect your most precious resource. In a one-person business, where you have no one to back you up, staying healthy is essential.

Although Martin works long hours as he grows his business, he always finds time to work out. Rising at 4:30 a.m. every morning, he goes to a gym where he can do strength training and play basketball. Then he heads home for breakfast and starts making phone calls from his office around 7:30 a.m.

On the weekends, Martin and his wife, Christelle, love to enjoy the outdoors with their German Shepherds, Bear, and his new adopted sibling, eight-week-old Olive. “I could definitely sleep more,” Martin says—but his life is too full of good things at the moment to spend much time hitting the snooze button.

Elaine Pofeldt is author of The Million-Dollar, One Person Business (Random House, January 2, 2018), a book looking at how to break $1M in revenue in a business staffed only by the owners.

I am the author of The Million-Dollar, One Person Business, a Random House book looking at how everyday Americans are breaking $1 million in revenue in businesses

Source: He Left The World of Traditional Employment And Built a Million-Dollar, One-Person Business

Which Company Could Be The Next Permian Basin Acquisition Target?

Following the news that Chevron had agreed to pay a nearly 40% premium to acquire Anadarko Petroleum, investors quickly bid up the shares of other potential acquisition targets.

As I argued in the previous article, I believe the Permian was the key to the Anadarko acquisition, but there are plenty of other targets in the region. There are also several companies with the capability of making acquisitions.

In recent years, the few mergers and acquisitions in the oil and gas industry have been largely focused on the Permian Basin. The supermajor integrated oil and gas companies have been increasingly making forays into the Permian.

In addition to Chevron’s new acquisition, in 2017 ExxonMobil paid $6.6 billion to acquire Permian acreage from the Bass family of Fort Worth, Texas. ExxonMobil also spent $41 billion in 2009 to acquire XTO, which has a major presence in the Permian.

Permian Players

Today major acreage holders in the Permian Basin include the supermajors Chevron and ExxonMobil, as well as Occidental, Apache and Concho Resources. Occidental, in fact, reportedly attempted to acquire Anadarko prior to Chevron sealing the deal. But Occidental may now find itself in the crosshairs of a bigger player looking to shore up their Permian portfolio.

But there are many other major producers in the region, including ConocoPhillips, EOG Resources, Pioneer Natural Resources, Noble Energy, Devon Energy, and Diamondback Energy. Smaller producers in the region include WPX Energy, Parsley Energy, Cimarex Energy, Callon Petroleum, Centennial Resource Development, Jagged Peak Energy and Laredo Petroleum.

Let’s first take a look at the largest companies operating in the Permian according to enterprise value. This metric is preferred over market capitalization, because it includes a company’s debt. In the case of a potential acquisition, the acquiring company would be responsible for this debt in addition to the purchase price. Hence, it is a more comprehensive representation of a company’s market value.

I have included the integrated supermajors that could have the ability to make major acquisitions, three of the larger exploration and production companies (which could make an acquisition or be a target themselves), and Anadarko for comparison. All data were retrieved from the S&P Capital IQ database.

Metrics for major oil companies operating in the Permian Basin.

Metrics for major oil companies operating in the Permian Basin.

Robert Rapier

  • EV – Enterprise value at the close on April 12, 2019 in billions of U.S. dollars
  • EBITDA – TTM earnings before interest, tax, depreciation, and amortization in billions of U.S. dollars
  • TTM – Trailing 12 months
  • FCF – Free cash flow in billions of U.S. dollars
  • Debt – Net debt at the end of the previous fiscal quarter
  • 2018 Res – Total proved oil and gas reserves in billion barrels of oil equivalent at year-end 2018
  • EV/Res – The value of the company divided by its proved reserves

Potential Buyers

Based on their size and debt metrics, ExxonMobil and Chevron still appear to be the most capable of pulling off a major deal. Shell has been moving in the direction of becoming a natural gas company, and has already made major capital expenditures in this area in recent years. Further, in 2016 they made their own major acquisition — a $70 billion deal for BG Group.  Meanwhile, Total hasn’t shown much interest in the Permian.

BP may not have an appetite for an acquisition as it continues to be weighed down by its obligations from the 2010 Deepwater Horizon oil spill. As an aside, the continued fallout from that disaster has also resulted in BP having the cheapest reserves on the books by far of any company listed in the table. Also note that the EV/Res metric for integrated supermajors isn’t directly comparable to pure oil producers like Anadarko, as the former also have midstream and refining assets.

ConocoPhillips appears to be the most attractive target for an acquisition from a pure valuation perspective, but as the largest pure oil company it would be a large bite for even ExxonMobil. With respect to making an acquisition, ConocoPhillips CEO Ryan Lance stated earlier this year that the company isn’t feeling any pressure to do so.

Occidental also falls into the category of potentially making an acquisition or of being acquired. On a relative basis, they are more expensive than ConocoPhillips, but on an absolute basis the price would be more manageable.

What about smaller players like Parsley, WPX Energy, or Cimarex Energy? Based on the price movement following the announcement of the Chevron-Anadarko deal, investors are clearly betting that more deals will follow. Below are some of the metrics of potential acquisition targets (with Anadarko for comparison), including some of the large players listed in the previous table:

Metrics for smaller oil companies operating in the Permian Basin.

Metrics for smaller oil companies operating in the Permian Basin.

Robert Rapier

  • 1-Day Change – Change in share price on April 12, 2019, the day the Chevron-Anadarko deal was announced

Note that the double-digit gains of both Pioneer Natural Resources and Parley Energy imply that investors believe they could be next on the acquisition list. Parsley looks attractively priced according to its enterprise value and total reserves. Several other companies stand out, such as Devon Energy and Cimarex, although all of these companies outspent their cash flow in 2018. An acquisition by one of the larger players could give them the efficiencies and economies of scale to rectify that.

Another name on the list that stands out is Diamondback Energy, which has long been one of my favorite Permian Basin oil companies. Diamondback has been an outstanding performer in recent years, but now looks to be the most richly valued according to several metrics following its 2018 acquisition of Energen.

The biggest challenge with the smaller players is that they may not have enough reserves to really move the profit needle for the biggest players. Laredo Petroleum’s 200+ million barrels of oil and gas reserves might not be sufficiently appealing to ExxonMobil, which had 24 billion barrels of reserves at the end of 2018. But it could be appealing to a company like EOG Resources, which closed the year with 2.8 billion barrels of reserves.

Ultimately, price and valuation are only part of the equation. Anadarko wasn’t the cheapest acquisition target for Chevron, but Chevron liked the synergies of Anadarko’s locations. Thus, every major operator in the Permian is more likely to acquire companies whose properties are adjacent to their own. A deeper dive thus becomes an exercise in not only value, but in studying maps of the Permian producers — large and small.

Robert Rapier has over 25 years of experience in the energy industry as an engineer and an investor. Follow him on Twitter @rrapier or at Investing Daily.

Robert Rapier is a chemical engineer in the energy industry. Robert has 25 years of international engineering experience in the chemicals, oil and gas, and renewable ene…

Source: Which Company Could Be The Next Permian Basin Acquisition Target?

World’s Largest Business Organization Embraces Blockchain

From the embers of World War I emerged a new kind of organization, led by entrepreneurs, committed to ensuring the free flow of goods across the world’s war-ravaged borders.

The International Chamber of Commerce, whose mission is to streamline global business, is one of last vestiges of the League of Nations, founded in 1920 by U.S. President Woodrow Wilson to peacefully settle international disputes. By 1923, following the League’s lead, the ICC had established international courts to arbitrate business disputes, and in the aftermath of WW II, it represented global business interests at the Bretton Woods conference, which established the current monetary order.

“If goods are able to move across borders without the need to be accompanied by troops,” says John Denton, the ICC’s current secretary general, “there is a higher probability of peace and prosperity.” The Paris-based group, which represents 45 million businesses in more than 130 countries and brands itself the world’s largest business organization, is now making its boldest play in a generation.

With global borders hardening once again, this time behind border walls, broken unions and looming trade wars, Denton signed an agreement with the Singapore-based blockchain startup Perlin Net Group to explore how the technology, made popular by bitcoin for its ability to move value without banks, could help the ICC continue its mission to facilitate the free flow of goods.

“We can trace back the ICC interventions that made a big impact on the global economy in the 20th century,” says Denton, who was a fellow at the Australian Institute of International Affairs before being appointed secretary general of the ICC last year. “We think this might be one which we can look back on in 100 years and say the ICC shifted blockchain in a way that enabled the private sector to function more effectively in a sustainable way and actually create more opportunities for people.”

According to the terms of the agreement, part of which was shown to Forbes, the ICC and Perlin will create a new group, the ICC Blockchain/DLT Alliance, a reference to distributed ledger technology similar to the blockchain that powers bitcoin. The companies are exploring how Perlin’s blockchain platform, which has yet to publicly launch, could be used to shine a light on obscure supply chains and simplify cross-border trade finance.

As part of the agreement, the ICC will help Perlin recruit members to its nascent blockchain alliance, specifically by making introductions to the organization’s massive member pool, which in addition to most national chambers of commerce includes direct membership from companies like Amazon, Coca Cola, Fedex, McDonalds and PayPal. Also, as part of the agreement, Perlin will join the ICC as an official technology partner, offering free access to its blockchain platform during the early stages of the project.

Denton shared his plans with the ICC Banking Commission at its annual event in Beijing earlier this week, and the agreement, which was signed on March 20, will be formally announced at an ICC event in Singapore later today.

Unlike some early blockchain consortia, the ICC Blockchain/DLT Alliance already had projects under way when it was announced. According to the agreement, the ICC and Perlin will share the results of their first blockchain proof of concept, a collaboration with the fabric giant Asia Pacific Rayon (APR), in May at the Copenhagen Fashion Summit.

For that project, called “Follow Our Fibre,” APR is logging data in the blockchain at every level of its supply chain, from the trees that are harvested to the chemical treatments that turn them into the silk-like rayon substance through to the massive spools that are later sold to clothing producers.

“Globally, there is a dynamic shift in the textiles and fashion sectors calling for a more traceable and transparent supply chain,” says Cherie Tan, vice president of communications and sustainability at APR. “Follow Our Fibre will enable us to leverage powerful blockchain functionality to drive greater efficiencies.”

Other proofs of concept in the works that stand to benefit from the ICC partnership include a project with Mfused, a cannabis processor in Washington State that is using Perlin’s tech to prove the origin of its plants by recording every level of its supply chain, from when they are planted to when the cannabis is inhaled, in a shared, distributed ledger; a project with an unnamed tuna processor in Latin America; and a developing project in Africa to trace the origin of cobalt, which has a long history of being mined by unethical supply chain participants.

Assuming enough supply chains are unified on the Perlin blockchain, businesses could log digital representations of the commodities, called tokens, on the platform. This will enable the counterparties to trade directly, with bills of lading required to move freight and letters of credit, which are typically handled by banks, all tracked directly on the shared ledger.

“An interesting economic model is we could effectively launch governance around this,” says Denton. “If we’re able to tokenize this we could insert ourselves as the trusted intermediary, and there would probably be an admin charge, but not much.” A 2018 report by the ICC, the World Bank and others found that 90% of the world’s trade finance was being provided by 13 banks, something Denton thinks is evidence of a need to decentralize.

Perlin’s blockchain, like ethereum’s, is being designed to let users track and move all kinds of value and write distributed applications (dapps) that don’t rely on centralized processors. Also like ethereum, Perlin will have a native cryptocurrency, called perls, which are expected to be minted over the coming three months or so, depending on regulatory considerations.

While supply chain management is increasingly seen as ripe for disruption by blockchain, models like Perlin’s, which rely on tokens, have had difficulty gaining traction as regulators clamp down on what is required of such tokens. By contrast, models using permissioned blockchains, such as what IBM is doing with a number of industry-specific consortia, and what R3 and Hyperledger are doing more generally, are seeing broader interest.

Perlin founder Dorjee Sun positions the nascent ICC network as similar to competing consortia but for small and medium-size businesses. “This is a massive democratization effort of DLT, because now any company of the 45 million ICC members can give the benefits of DLT a try,” says Sun. “Not just massive companies that can afford IBM’s services.”

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I report on how blockchain and cryptocurrencies are being adopted by enterprises and the broader business community. My coverage includes the use of cryptocurrencies suc…

Source: World’s Largest Business Organization Embraces Blockchain

Whopper Of A Turnaround: At Burger King, The 3G Capital Model Actually Worked

Challenge: Make a 60-year-old ham­bur­ger chain into something cool. Daniel Schwartz accepted that assignment six years ago after 3G Capital took over Burger King and named Schwartz chief executive. He was 32.

Burger King was a tired outfit, with a confusing menu and sales going sideways. Its restaurants averaged half the revenue of McDonald’s. But where there is underperformance, there is ­opportunity. Schwartz slashed overhead at the Miami headquarters. He streamlined food preparation. He dished out stock to middle managers. He shrank the payroll and the capital budget by selling company-owned stores to franchisees.

In the years since, Burger King has become Restaurant Brands International (following some more classic 3G dealmaking). Restaurant Brands is now a growth stock. Bur­ger King opened up 1,000 restaurants around the globe last year, to 600 for McDonald’s. McDonald’s stores still have a bigger average volume, but Burger King’s are gaining on them; in the U.S., BK boosted its average volume per outlet by 30%, to $1.4 million, while McDonald’s had a gain of only 20%. All of Burger King’s success is, of course, in stark contrast to what’s going on at Kraft Heinz, another 3G turnaround that went the other way. In February, Kraft Heinz said it was taking a $15.4 billion write-down, a signal that its classic food brands were losing value.

The situation is different at Burger King. At the parent-company level, where revenue consists mostly of franchise fees, Restaurant Brands took in $5.4 billion last year, up 17% from 2017. McDonald’s revenue was off 8%.

“How many companies that have been around since the 1950s grow the top line at 10%?” says Schwartz, 38.

For a fast-food conglomerate that oversees 26,000 locations with combined sales of $32 billion, Restaurant Brands is quite agile. Three months ago the company introduced the Whopper Detour promotion, in which Burger King offered its signature item for a cent if the customer ordered food on the BK phone app within 600 feet of a McDonald’s location. In February came the 45-second Super Bowl ad featuring historic footage of Andy Warhol slowly unwrapping and methodically eating a Whopper. The BK app topped the charts in Apple’s App Store during the campaign; throughout the Super Bowl, “Andy Warhol” was the most searched term on Google.

Maybe Schwartz can even make his ham­bur­ger chain cool enough for New Age customers. Plans are under way to introduce a plant-protein patty from Impossible Foods, the startup backed by investors like Bill Gates and the venture capital arm of Alphabet. This is a big deal for Impossible, with an expected rollout in 7,000 Burger Kings soon.

The past decade has been a whirlwind for Schwartz, who combined a certain amount of luck—in the right place at the right time—with a large amount of energy. A lanky guy who has a big smile and a tendency to speak with his hands, Schwartz left Cornell in 2001 with a degree in applied economics. Four years later, he landed a job at 3G Capital, the private equity firm that became famous for engineering the Anheuser-Busch InBev merger (and later infamous for the sickly Kraft Heinz merger).

Schwartz became a 3G partner at 27. “The group believes in investing in young people and giving them opportunities,” he says. “I worked hard and proved that I really cared. More so than anything else, I put the business and the firm ahead of myself.” His wife tolerated the long hours, perhaps because, as a physician in residency, she worked late too.

A Burger King restaurant with the brand's new look.

McDonald’s has ruled as America’s top burger for decades, but Burger King is making gains with newly refurbished locations made to resemble this conceptual drawing.

Schwartz went hunting for deals. Burger King looked intriguing. “I’d ask my wife or my mom, ‘If McDonald’s is worth $70 billion, what do you think Burger King is worth?’ They’d say, ‘$30 billion?’ ” Schwartz recalls.

Paying a 46% premium for the publicly traded shares, 3G acquired the chain for $4 billion, ­including debt. Schwartz then raised his hand to help run it. “I wanted to be part of this. And I didn’t want to just sit in an office and get monthly reports.”

At 29, Schwartz became BK’s chief financial ­officer. He sold the corporate jet. He told employees to use Skype to make free international calls. And to get a feel for the whole business, he worked shifts off and on at Miami Burger Kings, cleaning toilets, cooking burgers and manning the drive-thru.

In 2012, 3G took Burger King public again, and Schwartz got the chief executive slot in June 2013. In the next 18 months, Burger King stock doubled, while McDonald’s lost 8%.

Focused as he was on selling hamburgers, he hadn’t left behind his deal-making instincts. ­Rechristened Restaurant Brands, his company ­acquired Canadian coffee chain Tim Hortons in 2014. In 2017 it spent $1.8 billion in cash to get the Popeyes chicken chain.

Warren Buffett is a fan, having put up $3 billion in equity to help finance the Hortons deal. So is Bill Ackman, whose Pershing Square hedge fund owns 5% of the stock; 3G owns 41%.

The second-largest shareholder: the employees, with more than 5% of stock. Thanks to a match for those who invest their bonuses in RBI shares, nearly all 300 middle managers (average age: 37) own shares; at least 100 have become millionaires. Schwartz is sitting on about $100 million in stock and options.

“I’m comforted as an owner when all of the key employees own a lot of stock,” Ackman says. “It makes them much less focused on short-term things. They’re much more focused on ‘Will this make the business more valuable in five years, ten years?’ ”

Recently, Schwartz was moved up to ­executive chairman, and longtime ­Bur­ger King exec Jose Cil, 49, became CEO. “We take bets on people,” Cil says. “When they are ambitious and willing to work harder than anybody because they’re driven by something beyond a paycheck, they want to do something big.”

Schwartz lives in Florida with his wife and three kids. He has been working out of RBI offices in Miami and Toronto, but now he’s going to be spending more time at the 3G office in New York, with assignments that range beyond the restaurant chains. “I’m not gonna be CEO at another company,” he says. “But we aspire to do more, and over time we can buy another business down the road.”

Or perhaps repair some of the ­businesses that 3G already owns. Could someone who has engineered a turnaround at Burger King work some magic on old ketchup and cheese brands? His diplomatic answer: “Maybe you could ask me that question in six months, when I ­hopefully get a little bit closer to the business of Kraft Heinz.”

3G’s business is as much about building as buying and selling. Schwartz says: “Most traditional investment firms, if they were in our shoes, probably would have sold [RBI] many years ago. Not only did we not sell, we bought more brands along the way. We are building this into a big company with a long-term mindset.”

Follow Chloe on Twitter and Instagram.

I cover all things food and drink as a staff writer at Forbes, from billionaires and ag tech startups to CPG entrepreneurs and wine. I head up the 30 Under 30 Food an

Source: Whopper Of A Turnaround: At Burger King, The 3G Capital Model Actually Worked

The Business Case for Positive Company Culture

Carin Taylor, chief diversity officer at Workday, shared some of the results during a Business Leader Forum at the most recent Workday Rising. Nearly 40 percent of all respondents indicated that unfairness or mistreatment played a major role in their decision to leave a company; 30 percent of women of color felt they had been passed up for a promotion; and a large percentage of Asian and Caucasian men and women felt they were treated unfairly by leadership and management…………

Source: The Business Case for Positive Company Culture

The Most Sustainable Companies In 2019

As political and business leaders gather for the World Economic Forum in Davos, Switzerland, this week, a roster of the most sustainable companies is also enjoying a moment in the spotlight. The list, the Global 100, ranks large corporations across the globe on their performance reducing carbon and waste, their gender diversity among leadership, revenues derived from clean products, and overall sustainability. In its 15th year, the ranking is compiled by a Canada-based sustainability-focused financial information company and magazine, Corporate Knights, beginning with a list of about 7,500 companies, all of which generate more than $1 billion in annual revenue………..

Source: The Most Sustainable Companies In 2019

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