ICCC Team with Roshan D'Souza of BDC
Indo-Canada Chamber of Commerce recently organized a presentation for its small business owner members by Roshan D’Souza of the Business Development Canada (BDC) at its headquarters in Toronto. The presentation was on the topic of ‘Building value in your business – how to move the operational and growth levers’. D’Souza delineated the process of enhancing productivity as well as strongly advocated the need to have a strong online presence.
Explaining the profit equation – adjusting the levers, he said the simple formula of Revenue – costs = profit should be factored to the productivity challenge. He emphasized that Canadian productivity is lower than that of many developed countries – it’s in the median range when compared to over 30 developed economies. Canadian businesses face a growing productivity gap – relative productivity levels, Canada and the United States (Canada GDP per hour as a percentage of US GDP per hour). It was – 5% in 1984, -15% in 1997 and -27% in 2015
Manufacturing constraints cause difficulty for Canadian SMEs to adapt and perform. Higher variety – lower volume = high pressure on manufacturing costs – high expectations for quality, but with short delays.
D’Souza said that disruptive innovations are emerging rapidly and that foreign countries are more proactive in deploying advanced manufacturing technologies…”In response to rising labour costs combined with a shortage of workers, China has begun to provide incentives to encourage businesses to utilize robots to replace factory workers.”
Roshan D'Souza making a point
Following this broad introduction to his topic of discussion, he then warmed up to the main theme:
Moving towards a culture of continuous improvement – A Strategic Imperative. D’Souza discussed how can operational efficiency help Canadian businesses? Businesses can Reduce waste, create more value for their clients, improve agility by adopting a simple, adaptable and repeatable strategy. The three critical factors of operational efficiency – benchmark performance, identity and eliminate waste, monitor and manage performance.
After implementing a culture of continuous improvement, the next stage is to benchmark performance. Do you know how you compare with the best in your industry? Only 6% of Canadian SMEs formally measure their performance across their business and compare their results. He introduced the concept of Value Creation Index as a means to measure productivity.
What is the Value Creation Index (VCI)? VCI = Added value in $ for each hour of labour. It is a productivity index linked to financial performance and it also focuses on variable costs (raw material and labour) and sales. The benefits it offers an entrepreneur will be to understand the productivity index, compare performance against industry average for the appropriate NAICS code, and build legacy by using VCI to compare performance over time. Calculating the VCI is a simple formula: Sales – (Raw Material + Subcontracting) divided by hours of labour = VCI.
Example
i. $4M - $1M = 3M in added value
ii. $3M divided by 46,154 hours
VCI = $65 av per hour of labour
Then, D’Souza gave VCI examples:
Dairy product (except frozen manufacturing) $100
Aerospace products and parts manufacturing $132
Machine shops $59
Wood kitchen cabinet and counter top manufacturing $42
At this stage – stage 3, it becomes important for the entrepreneur to identify and eliminate waste. D’Souza distinguished between Value-Add vs. waste. He explained that added value activity is the operation for which the client is willing to pay for, whereas waste – any activity that adds cost ($$$) without creating value for the client. An entrepreneur should maintain added value activities but eliminate or minimize the waste. Common forms of waste are overproduction, waiting, transport, inefficient operations, inventory, motion, non-quality, poor design.
Participants at the program
Having reached the final stage by now, it is imperative for the business to monitor and manage performance. The performance dashboard provides
i. measurement and communication of performance indicators
- The objectives
- The results
- The opportunities
ii. Identify, plan and communicate
- Action plan by project to address major issues
- Improvement ideas to eliminate non-value added activities
Finally, D’Souza emphasized that after all the stages of implementing Building value in your business, the key takeaways would be:
- Given the global context the urgency for Canadian businesses is to act now
- Benchmarking is critical, established aggressive productivity objectives and work on a daily basis to achieve and surpass
- Obtaining incremental improvements is a better option than continuing with the status quo
- Focus on the 3 critical factors of operational efficiency
- Technology and innovation are great allies and should always be taken into consideration
Then, focusing on the increasing online presence of the consumers, D’Souza said, Canadians are online – 82% use the internet, 56% shop online, 80% research online before buying. This is true globally, too, where increasingly, consumers are moving online. The world of sales has changed – no longer a sales process; it’s now a buying process.
However, in Canada, only 17% of SMEs are selling online. It is a huge opportunity for SMEs today. Then D’Souza explained the process in the following manner:
Start with Why – define your purpose – align your story behind a core purpose (save the environment / new frontier / break convention)
Brand influence more than good looks – your brand is beauty and brains
Elevator pitch – draft a powerful opening story – what do I do or specialize in? Who am I? How do my clients feel that they benefit from my offering? Who are my clients?
He gave a personal example of the elevator pitch: I’m Roshan D’Souza, Senior Partner at the BDC. I’m a business diagnostician who helps Canadian entrepreneurs grow and optimize their businesses. Business owners work with me because I have a proven track record of helping companies increase revenue and reduce costs adopting BDC’s advisory methodology.
In the final part of the presentation, D’Souza reverted to the tried and tested adage of the customer being king.
- Understand your customers
- Demographic information: Age, gender, education level, income level, occupation, family size, household income, geographic area
- Digital footprint: Social media engagement, online purchasing, time spent online for personal use, preferred platforms, mobile engagement
- Pain points: needs, challenges, frustrations
- Map your customer’s journey – awareness, active search, evaluation, purchase, delivery and usage, re-purchase, loyalty, advocacy
This process also involved
1. What’s your why?
2. Document your story (brand manual)
3. Understand your customers (research)
4. Map your customer journey (strategy)
5. Tell your story and measure the return
Following the presentation, D’Souza then introduced the different ways in which the BDC can help small entrepreneurs benchmark productivity through its Canadian business productivity benchmarking tool
He said, BDC is the only bank devoted exclusively to entrepreneurs. It offers flexible financing to support growth and protect cash flow, advisory services on an enterprise-wide range of subjects, biggest and most active venture capital investor in Canada, It has 42,000 clients, 2,100 employees, 110+ business centres, $26b in financing committed to clients 72 years of existence 94% of clients are satisfied with its services,
BDC’s goals – provide top-notch advice to help you
1 increase your sales
2 find new markets
3 improve your operations
4 optimize your technology
5 build your management capacity
