In the “another good idea I got from reemer department” comes a post about http://www.kiva.org. Simply put, kiva links up capital with entrepreneurs that need it.

Many moons ago I took a course with Reuven Brenner called “Creating Wealth and Prosperity”. It was filled with big picture thinking and I loved it. Professor Brenner is one of the most staunch free market advocates anywhere and has piles of data to back up his assertions. His course can largely be summed up by this quote from his book The Force of Finance:

“Prosperity is the result of matching brains with capital and holding both sides accountable…”

That accountability has traditionally come from a solid legal and regulatory framework. For instance, let’s say a company wants to borrow money to purchase a new factory. In Canada this business can purchase a factory with little fear that it will be expropriated by the government. If expropriation was even a remote possibility, lenders would require a much higher rate of interest on the capital that the company borrowed — to compensate for the higher risk. There are many other potential risks as well: currency fluctuations, corruption and inflation to name just a few. So in high risk countries only projects that can compensate for this risk through profit potential are funded.

Kiva.org eliminates this problem for entrepreneurs whose projects don’t have the profit potential to compensate for the high perceived risk of traditional investors. The projects on kiva.org are small but can have a big impact on the communities they serve. They can create products, services and livelihoods. Choose the project that most speaks to you and distribute a little capital.

Technorati Tags: kiva.org, microfinance, loans, Reuven Brenner

During my years at the McGill MBA, I took a lot of interesting classes. One of the most interesting was called Finance with Finance Practitioners. It was a lecture course taught by a series of impressive characters including Stephen Jarislowsky, John Dobson and others. It was a chance to see how all this book stuff actually applied to the real world. One of the most interesting things we learned was how these people systematically looked at companies. I think it’s a really useful tool for an entrepreneur who wants to evaluate how she’s doing. I’ve distilled their thoughts into a few points that you small business owners out there will hopefully find helpful.

Macro and Industry Analysis

Analyze your business in relation to your industry. Get your hands on some projected growth data. Where are analysts saying growth is going to come from? How does your business fit into the big picture? How are you involved in those high-growth areas? Perhaps you can rework your current strategy to take advantage of these perceived opportunities.

What challenges does your industry face? Is new legislation a threat? What about currency movements? Is there an innovation that threatens to make you irrelevant? Is there a big player who could squash you like a bug? Do you have a sustainable competitive advantage? How easy is it for someone to copy your formula? Create barriers to make a copycat strategy difficult.

Financial Health

So your accountant prepared those pretty financial statements at year end: have they just sat in the drawer ever since? Take a look at your Balance Sheet, Income Statement and Statement of Cash Flow. Ask your accountant if she sees anything unnerving. Analyze your key financial ratios. When applying any sort of quantitative analysis, you must remember to take into account the nuances of your particular business. Identify problem areas and take steps to correct them.

Operations

How would you characterize your operations? Are your labour and material costs under control? Can they be reduced? How do they compare to the competition? Is there a new technology that can help you to operate more efficiently? What are the problems? You should be ready to develop a plan to address any concerns you have and increase efficiency as well.

Growth Strategy

What’s your growth strategy? Do you plan on acquiring a small competitor or growing organically? What are your goals for growth this year and how do you intend on measuring them? Does it look like you’re going to meet your goals?

This is also the place to address how much you’re investing back into your business. What are you investing in? What sort of your growth do you expect to come from these investments?

Management and Employees

Smart investors want to be involved with great management. So how are you performing? What about your business partners? Are you using a mentor or advisory board to help with strategy? How could you improve your management? Have you done any training? What about seminars? Is there anyone you could steal from a competitor that would really add value to your firm? How is morale?

Your products

What is the quality of your product or service? How strong is your brand? Are you considered the best in breed? Where are you in the product lifecycyle? Are your margins healthy? Is there a danger that your products are becoming commodities? What steps are you taking to continually improve your products? Are your customers noticing?

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That’s a lot of questions - probably more than enough to get you started. I enjoy this exercise because my brain isn’t always as organized as it could be. It helps me (and hopefully you too) to break down a major task (taking stock of your business) into these very doable tasks.

Technorati Tags: finance, entrepreneur, smallbusiness, analyst, growth