Case analysis

Company: CarShareHFX

Size: Small

Industry: Transportation

Business Activity: Transportation and Storage

Type of Entity: Private Company

Number of Employees: Fewer than 25

Country: Canada

Headquarters: Halifax, Nova Scotia

Yearly Revenue: $1 million to $25 million

Gender: Female

Subject: Entrepreneurship

Keywords: 

Issue

Pam_Cooley_Issue_1: Can you describe an important issue that you had to resolve?

I am Pam Cooley, I am Founder President of Car Share Atlantic known CarShare Halifax. I started CarShare in 2008 with a business partner. I had lived in Vancouver for 25 years. I brought car sharing to Halifax. Nobody knew what it was. Like, what is this new thing? What? Get out of my vehicle? Are you crazy? Nova Scotians love their vehicle. I was building a brand new thing with a brand new concept in Halifax and it was challenging. So the issue was, how do I build a membership? How do I build awareness about the value of car sharing for individuals and for business?

Cause

Pam_Cooley_Cause_1: What caused the issue and why was it important?

We were a two person company. We were brand new in the city. New concept, completely new concept. We had limited funds. We participated in the loan program through BDC and the Credit Union Atlantic and the government. I needed to raise funds in a different way to keep the company going. There were a number of challenges starting up.

Background

Pam_Cooley_Q1: Can you tell us a bit about yourself and your career path to date? 

My name is Pam Cooley and I am the President and co-founder of Carshare Atlantic. However, our name is known as Carshare Halifax. Although, we are actually moving to Carshare Atlantic pretty soon. My career path. Well, I started off here at Dalhousie University and I took a recreation degree. And then I was a consultant for international events. But then I went out to Vancouver to work expo and I decided at that point in time to work as a street worker because of what was happening in expo. So I have had a social conscience and to look at effects of how we are doing things for a very long time. And so from there I became a human rights worker in Central America and Mexico, and mostly in Guatemala, and I also worked in the downtown eastside which is the poorest neighborhood in Canada for about twenty years. Working in various organizations but mostly with women and First Nations people. So from there I believed I really wanted to make a difference and what I recognized is that actually business does make a difference. And so I decided to become a social entrepreneur, and decided that business is actually a way to change the world.

Pam_Cooley_Q2: Can you describe a typical workday for yourself? 

That is funny. I do not think there is a typical workday for an entrepreneur. I do not differentiate my style is that I do not differentiate between work and play and responsibilities. It is kind of all mixed in. I am responsible for my time and I am responsible for things to do. Family. My mother is turning eighty-eight today. And other responsibilities that I have are mixed in with my time. So, often times I'll do my creative work in the early morning or in the evening when there is quiet around. Meetings during the day. So phone calls, emails for when other people are doing business. That would be as typical as I get.

Pam_Cooley_Q3: Can you describe your role in the organization?

I look after the company. I run the company. I grow the company. So, the role that I play mostly is- when I say growth I mean how do I bring more members in and increase the fleet? Those are the two main things that we do in terms of growth. But my responsibilities include making sure that our members are satisfied. We have a motto here that is we are friendly. We want to be friendly and provide good service. That's basically the two main things that we do. So my role is to make sure that that happens with all of my, with everything that is interconnected. So with suppliers, with the members, with my business partners, with my community partners. All of those people. We are friendly, and we do good exchange. So my role is to make sure that happens.

Pam_Cooley_Q4: Can you describe your leadership style? 

What I have been called, a number of things. So I will give you what other people have described me as and- and I can then describe myself from my thoughts. But people have been called- have called me a practical visionary. In other words, I know, I can see, or I have an idea or hypotheses of the future because I spend a lot of time looking at what is possibility? What can we do in any given industry? But often in this industry. And then but I am really practical and so like okay, what is the next step to get there? Okay so what is the next- there is always a next step. What do we need in order to do that? And if in marketing, what is the next step? Member services, what is the next step? So this is what other people have described me as. 

Pam_Cooley_Q5: What does good performance mean for you in your position?

I think that the world kind of helps to find that. So, I like to run the company in a way that is friendly, that is ethical exchange. In other words, I have something to offer at a certain price that works for our company to run. "Do you want it? Do you like it?" So it is that, it is that exchange so if we're growing and more people are joining, then that is an indicator of our performance. If we get a lot of complaints, and they are in a certain area, and we- we do research on that, we do surveys and things like that, then- then we get indicators of whether we are doing good performance. I tell the staff, friendly and work ethic. I don't believe that people should come to work to do what the boss says only. It is like, what are you there for? What are you learning? What do you want to do with your life? Is this a step in your ladder? Is this a step in your path? And what do you need to learn? So all of those things are part of what I would call performance because performance is having an effect out there and if I am having a good effect, then I get good feedback. If I am having a bad effect, then I get bad feedback. 

Pam_Cooley_Q6: What does your organization do and how is it different? 

Our company is a car sharing company which means that we offer an option to personal used vehicles or fleet used vehicles. So we usually say, access to a vehicle rather than ownership. So our competitors so to speak, would be private car ownership and that is about it because all of the other transportation modes, even rental cars because people go "oh are you competing against rental cars?" are complementary to car share. Basically what we are trying to do is create a way in which it is so compelling to get out of our personally used vehicles or even our second car vehicle. So what we are doing is that we are creating a way in which people can have the convenience, the ease, the accessibility to a vehicle without them having to own a vehicle. So private car ownership is actually the competitor. Not the dealers themselves but just the concept because we want to contribute. We think that every city in the world right now is looking at how to move people with fewer cars and we are expanding to other cities in the Atlantic region. We want to help and contribute to that because you can not get people out of their cars unless you give them an option. And transit does not do it, you know cause when transit is not enough, when two wheels are not enough for biker for people who are on bicycles. So we have a complementary sort of mix, a multimotive mix to contribute to. What makes us different? Our differentiation between car ownership, or even rental cars for that matter is that you join once and then you have access to the vehicle. Like for instance, rental car agencies you have to go every time and you have to apply every time. With us, you can just join once and you're a member. You have access with your own little key fob. You have access to make reservations with your phone, we have a little app. And so it's convenience that way. And also the car can be- you can have different types of cars. You know, you can have a Sudan one day, you can have a hatchback the next day. And so we differentiate between- with personal- personal car ownership you don't have that variety and we also take care of everything, so you don't have to. Vehicle car ownership, you have- you know, you have to fix it yourself, you know, or get it fixed. You have to find parking, you have to pay the loan, you have to pay insurance, all those things. And so you're one fee, and your annual fee and your trip fee pays for all that. So it's considerably less per year. So on average, people can spend ten thousand dollars a year on a car, whereas with us on average people spend less than two thousand dollars and still have all their needs met.

Pam_Cooley_Q7: How is your company structured or organized? 

Well our company is structured very simply and we have to do that in order for us to have what we have really is a low margin, high volume business. Sort of like a hotel. We actually have to you know, have you have capital costs. We have these cars. We actually have to get people in them, and so like a hotel, we have to have some effort to make sure that those cars are filled. And we have formulas around all of that. But how we're structured in terms of personnel is is that we- at the beginning of our company we did everything like most start-ups. It was two of us. We did all the member services. We did fleet management. We bought all the cars. You know, everything that has to do with running a small business. And then in 2011, it got to be too much. We could not do it. The volume was just way too much to scope. So it is one of those moments in time where we had to change and so we asked for help with a major company in Montreal called Communauto, and we partnered with them to do more of the member services and get help with the fleet management. So we learned- we actually asked the granddaddy of all car sharing in North America. So Benoit Robert, who brought car sharing to North America and- about twenty-three years ago. So they said yes and they helped me and I learned a lot from them. So this is one of my big lessons so we have a very simple I am on the ground making partnerships and we have a fleet support person who looks after the babies. So as the fleet grows, we will add personnel to that, but basically we have a decentralized operation with two people on the ground here and everything else happening in Montreal.

Pam_Cooley_Q8: Can you describe any key events that occurred either in your life or that of the organization that were crucial to success over time? 

It was that moment that all small business entrepreneurs go through, cause I have asked all of them. It's that moment- and I you know, forgive me for my description, but this is the truth. I was sitting on the toilet one day with my head in my hands, going "what am I going to do?" Our company was growing. It was working. Like nobody had heard about car sharing in Halifax. Maybe a handful. Maybe fifty people in Halifax had heard about car sharing. So it was growing and it was working but our money was running out and my knowledge and my experience was getting to my limit. And I didn't know it at the time. I was kind of like "well you know I'm making this work, I am making this work" and "something will happen" and "I will figure it out, I will figure it out." And so it was this moment where I went "I don't know what to do. I have no clue what to do next." And as soon as I hit that moment of absolute humility, like I'm empty, I have nothing, you know. The answer came. It was like- it was like this moment of like- and the answer was- it just came. It was just like this little thought. It was just like "Montreal". And I went "Oh my god. I could ask for help." It was just like this moment of absolute humility. So as the story goes, I just called them and they said "yeah no problem, we will help you" and it was a beautiful thing.

Pam_Cooley_Q9: How does your organization make money or sustain itself financially?

As I said, it is a high volume, low margin business and what that means is that I have to have a lot of people decide to do this in order to make money. And this is part of the social mission, so what we are trying to do is we are trying to make it affordable for almost anybody but not be seen as, something that only people use because they can not afford it. So our business model it to make our pricing such that it is doable for us, and it is doable for the member. So what we do is we have an annual fee, and that changes depending on the program. So- so it is as low as forty dollars for our lowest annual fee. And then we charge by the hour, and then we charge by the kilometer, by the distance. So there are a number of variables that have to be taken into consideration, but basically that is it. An annual fee- we also have what's called a membership bond and this is- this is there up. This is what makes it work. So you can join our program, our like our normal little program for forty-eight dollars a year, five ninety-five an hour and seventeen cents. This is in- this is 2015 so I do not know when you are going to be watching this but that is what it is now. Or you can join what's called our liberty programs, and our liberty programs, you put down a five hundred dollar bond which is totally refundable, 100% refundable when you leave the program. So when you leave the program it is totally refundable. What happens is that I use that money in order to finance the company? So it is kind of like a cooperative, but not quite because I am a incorporated company. It is a for profit company. So that money helps me run the company.

Pam_Cooley_Q10: Who are the customers of your company and why they buy its products or services?

So recently we were thinking about- we are actually going to be doing an animation video to engage people into why they should join car sharing. And it was really interesting, this thought process because what we decided to do is- is look at what I call the life cycle of a car share member. In other words, we want to get people to understand early on, like there is a lot of people- especially young people, they'll never own a car, which is great. And then they'll go through their lives and they will use car sharing, and they I will use car-sharing cars for different reasons. Okay, so we can go as low as twenty. Our insurance company allows us to go down to twenty. Our youngest is twenty because that is what our insurance company allows us and we are pushing to go lower. Although, things kind of change insurance wise in terms of increase in accidents for people who are younger. So the reason why people would join Carshare when they are twenty is different than when they join Carshare when they are fifty-two or when they are eighty-two. So our eldest is eighty-two. Now according to our stats right now in 2015, most of our- like 60% of our members are between the age of twenty-five and fifty-five. So you can see that there is a bit of a bubble but what we are trying to do is we are trying to increase it down to twenty we are doing campaigns of students particularly. But there's a life cycle, so you would use it when you're twenty for getting around, obvious reasons, and then at twenty-five you might have a family, so you need it for your family. And at thirty you might need a second car option because you've got more kids and you need to drive them around. And then at forty there is different reasons and then as you get later in life, you don't want to look after a vehicle, so people are leaving their vehicles and joining Carshare because we take care of everything. It is very convenient for people who are older. The whole idea of you know, the car means something about you, is leaving. It is kind of like, when you're driving up in big huge cars nowadays; it's kind of like people looking down at you. It is kind of like a social phenomenon, sort of like cigarettes were. So our social change, the idea of the young people not owning a car is real and we are counting on it for their life and their life cycle.

Pam_Cooley_Q11: Can you describe the industry within which your company operates?

I just came from an international car sharing conference that happened in Vancouver last year- last week. And car sharing is like this. I'll- I will show you. It is the hockey stick. So it is been growing, growing, growing, growing and then all of a sudden it just goes (up) and there's no- there is no sight- and there is no end in sight. Because of the way that cities are- are recognizing that their mandate is how to move people with fewer cars. So- and you can see- you can see- and I actually do not know the stats cause I will I would be quoting incorrectly. I can find out for you but. Globally it is taking off because and you can see it because car rental agencies are now buying car share companies, you know, that's an indicator that they are, the writing is on the wall. They can no longer necessarily provide all of the needs that the car sharing people are- are providing. So like for instance Avis just bought Zipcar which is a multi-city organization. And Enterprise just bought Autoshare, which is in Toronto. So you can see by what industry is doing and how it's shifting that it is nothing but growth. The other thing that's happening in our industry is what we call my organization is what we call round trip. I have right now I have cars in stations in locations and you pick it up there and you go and do your trip and you bring it back. And you get it ready for the next person. What is coming up and what is happening right now is what we call free floating, and what some people call one-way. And what that is that there is a zone in the city where you can pick up a car and you can take it and you can leave it to another place. So that is actually complementary to what we call original car sharing and that's an evolution- technology is actually providing and is paving the way for us, paving the way.

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Introduction

As of May 2011, Farmworks Investment Co-Operative Limited was incorporated as a for-profit Co-Operative. This company was created in order to promote and implement strategic and responsible community investment in food production, in order to be a viable local food supplier to Nova Scotians (FarmWorks, 2011). This company has been able to raise capital through shareholder investment which then translates in a Community Economic Development Investment Fund (CEDIF). These CEDIF allows Nova Scotians to invest in local and provide them with support and assurance for their food production. CEDIF’s are a very important RRSP for Nova Scotia because it provides local members of the society to invest in local businesses and farming production, in order for the money to be given back within the province, providing economic growth and job opportunities and not all across Canada. Mrs. Best who is the appointed Co-Chair for Farmworks has described the current issue as to is how to ensure FarmWorks remains as sustainable since they are seeking clients all around the east Coast. The leading cause is the fact that Nova Scotia is prone to being a healthy province, and with that image Farmworks would like to continue to maintain the sustainability for all food producers (Best, 2015)

Analysis:

Company Analysis:

FarmWorks was established when community members were troubled about the food, social, cultural and economic needs within Nova Scotia. FarmWorks mission is to provide socially responsible investment in food production in order to increase access to sustainable local food supply for all Nova Scotians (FarmWorks, 2011). Since their is a huge potential for for food-related enterprises to contribute Provincial economic benefits, Nova Scotia farmers have been able to utilize their resources with the help of FarmWorks to continue to create jobs, increase food efficiency and overall keep the money within this East Coast province (FarmWorks, 2011). Approximately agriculture employees about 5,500 people with around 22,000 being employed in the other food industry. These agricultural businesses provide and welcome a substantial portion of incomes to families living in Nova Scotia (Best, 2015). Right now, there is fourteen directors working at FarmWorks, trying to collect the sales of shares that can provide to provincial tax credits.

CEDIF has been able to capitalize in the province of Nova Scotia because it allows community members to invest in local food production which in the long run, helps rebuild the local economy. With this money invested, it is an investment strategy for those who consider both financial return and social good.

SWOT analysis:

Strengths

Farmworks is currently providing an exemplary model for which Nova Scotians will be able to get loans, and pay them back in a time period that has no affect to the government, since they are not enabling tax credits (Best, 2015). Another strength would include their ability to raise capital. They are literally raising the money from local community members who are interested in putting their money where profit will rise and regrow within the same province. Farmworks also has a large group of Board of Directors, including nine officers and two co-chairs, that have annual meetings to discuss the future growth within Nova Scotia.

Weaknesses

When Mrs. Best started this company, there was over 12,000 farms in use when producing and growing food. Now that number has certainly plummeted to a range of 4000 Nova Scotia farms that are making home grown food. The rest is imported, which is taking money out of this province’s economy (Best, 2015). The major issues and weaknesses for the company would include the over sustainability aspect, which entails not only how the company will continue making money but also how they can help their clients stay sustainable and in business. As of right now, Farmworks also has an increasing deficit which is why as Group One works through the solution, we need to figure out a solution that does not cost anything because they cannot afford anything (FarmWorks Co-Op, 2011).

Opportunities

Due to FarmWorks need of sustainability, and increasing deficit an important opportunity would be for them to seek an adjustment on their prices to farmers as a lending agreement. FarmWorks would charge more to their bakers without raising the retail price. Another opportunity for the future would be to merge or partner with another, although they would need to take into consideration the company to have this partnership with and if it beneficial to Nova Scotia and the sustainability factor. Another factor for FarmWorks to seek, would be the investment opportunities for higher return. Finally, there is an opportunity to help the farming and food producing industry with all of the farming potential within the Nova Scotia region. There’s lots of opportunity to grow this business considering all of the farming opportunity in the Nova Scotia area, even more specifically, the valley region.

Threats

Major potential threats to FarmWorks and farmers in general is the high percentage upgrade for pork and beef costs. These would essentially increase global demand, making a new wave of production and distribution of food products throughout the world, including the 4000 farms within Nova Scotia (Best, 2015). To keep into consideration the many FDA and regulations that need to be approved for this company to continually be successful and create a sustainable company and clientele.

Decision Criteria :

We are going to choose the solution based on these decision criteria: sustainability, cost, create job opportunities, economic growth within province, get more investors, decrease default loans

Alternatives:

1. Do nothing - This would imply remaining on their current course.

2. Adjust loan requirements - Making the prerequisites for determining acceptable loan applicants more strict.

3. Merge/Partner with another - Potentially partner with other institutions who provide agricultural loans such as RBC Royal Bank, Farm Credit Canada FCC, and CIBC.

4. Raise the price requirements in the lender agreement - This would increase the profitability of the farms and this alternative would include potentially suggesting this solution to other institutions who provide agricultural loans.

5. Reduce share price - This would increase the appeal to a broader range of investors to increase capital.

Decision Matrix:

Solution and Justification:

Our solution is to raise the price requirements in the lending contracts because this will increase the overall sustainability of the company and meets most of our decision criteria compared to our other alternatives. If this works, this will decrease the amount of defaulted loans and decrease the amount of current deficit and reduce the probability of future deficit. If the farms that their lending to become more sustainable then this will cause a ripple effect progressing to economic growth.

Implementation:

We suggest to implement this solution by putting in the lender agreement that they will increase their prices to produce a profit percentage between 30-35% instead of the current percentage ranging from 10-20% ( Elitzak, H. S. (n.d.). We expect them to keep retail prices the same and solely increase the costs for the “middle men” who have increasing profit margins where farmers margins remain relatively the same throughout the years. (http://www.nfu.ca/sites/www.nfu.ca/files/Ministers_of_Ag_brief_FOUR.pdf). In order to make this solution sustainable, we suggest FarmWorks encourage this solution to other companies who fund agricultural loans to implement the same solution.

Risks:

The main risk to this solution would be other local farmers keeping their prices constant/lower which would increase the risk of more default loans or the buyer's switching to another farmer further away. We assume that where this is such a small area compared to the rest of the country and other provinces that transportation costs would be too high and not worth switching from a local farmer to transport products from another area.