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Mentors for hire guide new businesses Add to ...

The surge in entrepreneurialism that's spurring business creation across the country is underscoring the growing need for mentors.

A recent Business Development Bank of Canada survey found 11.2 per cent of respondents plan to start their own business in the next year, up from 7 per cent in 2009. And far from identifying it as their only choice because of the recession, most said they were responding to perceived opportunity.

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But venturing into the small business world brings challenges as well as opportunity. New entrepreneurs need help along the way, but often have nowhere to turn with their queries about credit risk or inventory or marketing. Unfortunately, there's a lot riding on their inexperience. Uninformed decisions can have repercussions as severe as losing the family home. As a result, many new entrepreneurs are desperate for solid, unbiased advice.

That's where mentors can help.

The Canadian Youth Business Foundation (CYBF), a not-for-profit organization that pairs entrepreneurs aged 18 to 34 with mentors, is scrambling to meet demand for these experienced business coaches. The number of start-ups it's involved with has tripled in five years and, since mentorship is a condition of securing a CYBF loan, the foundation is constantly recruiting. "We have tripled the number of mentors recruited over the past five years," said Norm Grey, CYBF's director of mentoring.

The organization, which has funded 3,879 entrepreneurs since its founding in 1996, has nearly 2,000 volunteer mentors. They range in age from their mid-30s to 60s and beyond; each commits to four or five hours a month.

"Mentors really act as a sounding board and provide opinions on important issues," Mr. Grey said. "I have had many occasions where the entrepreneur will come back to me and say, 'Norm, in the first hour the mentor already saved me thousands of dollars by asking me questions and suggesting my inventory might be too high.'"

The value they provide has also created business opportunities. In April, Philip Maguire launched Executive Mentors, which has an unusual approach to the selection of these business guides.

"Our six mentors are retired business people, not professional coaches," said Mr. Maguire, managing director of the Toronto-based company, who's a former consultant and vice-president of finance at a major Canadian bank. "Coaches generally come from a psychology or human resources background. These are tried-and-true business people. These people have been presidents of their companies and founders of their companies and though retired are still deeply involved in the business world, often serving on various company and corporate boards."

He said there's an element of altruism involved despite the fees, which the company declined to specify but said are competitive with other executive and coaching firms.

"Because they are retired, they are not looking at it as a source of income as much as doing a service for people, while at the same time keeping it business-like, charging for their services," he explained. "My observation of more informal mentoring relationships is that they peter out very quickly because the mentor is too busy and the mentee loses interest."

For entrepreneur Bohdan Baluta, it's money well spent.

"To me it's very simple," said Mr. Baluta, owner of Bohdex, an Oakville, Ont.-based consulting firm that offers customer and IT strategy services to utility and telecom companies, including Hydro One and Bell. "I would have loved during my career to have run into a grey-haired guy who was smart and would have shepherded me along the way. For whatever reason, that just never happened.

"I need a mentor, somebody to help take me to the next level, which is growing the business in a sustainable way."

About three months ago, Mr. Baluta hired Murray Davidson through Executive Mentors. Mr. Davidson's background in consultancy and his experience working with utilities matched well with Mr. Baluta's needs.

"I've had my own business, Bohdex, going on nine years ... and I get a lot of advice from friends and colleagues," Mr. Baluta said. "But I thought I could really use somebody who's been there and done it, especially in the same areas I'm working in."

They meet in person about every three weeks, communicating through phone calls and e-mail the rest of the time. "The way I look at it you can easily spend three or four thousand on training so if I spend $10,000 to $15,000 (for the mentor services), it's money very well spent because it's very targeted." For instance, Mr. Davidson pushed him to create a two-page promotional package to help break the ice during initial meetings with potential clients, a chore he normally would have deferred in favour of billable hours. "Murray's like my conscience," he said.

For his part, Mr. Davidson recognized that "Bohdan needed to talk to somebody who was kind of outside that client, colleague, friendship network. Someone who could give him very honest straight talk but also with a bit of an edge."

Bohdex hopes to work with Ontario utilities that are gearing up to meet the Ontario Energy Board's smart-meter requirements, and Mr. Davidson is "fully conversant" with the regulatory requirements. "So Bohdan and I have talked about what the timetable is, what the utilities need to do and what role he could play for those utilities." On Mr. Davidson's advice, for instance, Mr. Baluta joined the industry association so he could meet officers of municipal utilities.

"Murray's entire purpose in this relationship is to make me better," Mr. Bulata said. "There's no other baggage in the relationship."

Business schools have also picked up on the trend toward mentoring, and some now offer students the opportunity to form a close relationship with a mentor or coach. At Queen's University, MBA students have the option, at no additional charge, of pairing with coaches who offer services similar to a mentor's, said Brian Marchant, director of the team and personal coaching group at Queen's School of Business.

"During the past five years (mentoring has) really taken off and that's the reason we did it," Mr. Marchant said. "People in our executive program were asking about it so an institution like ours had to take a look at it."

At the master's level, about 50 per cent of students opt for a personal coach, Mr. Marchant said. "Of that group about 10 per cent continue with the coach afterward (with students paying the coach directly)."

Demographics will play an increasingly important role in the growth of mentoring and coaching as baby boomers prepare to leave the work force. CYBF estimates more than 70 per cent of small business owners will retire within 10 years.

"We're seeing more of the boomers moving into these paid coaching gigs because it's a nice way to pass along their knowledge and wisdom and still get paid for it," Mr. Marchant said.

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