Nick Kozak for the Toronto Star
Case Studies

Last Minute Training must hire or become Toronto’s “Kijiji of training”

Vital Stats
Name:
Last Minute Training
Owner:
Louis Trahan
Address:
2017 Danforth Ave., Suite 200 Toronto, ON M4C 1J7
Field:
Training
Years Active:
8
Contact:
ltrahan@lastminutetraining.ca

Last Minute Training could be, as its owner puts it, “a Kijiji of training.”

But that would require venturing into unfamiliar and expensive territory — selling to consumers instead of businesses. Alternatively, the company, which finds and fills vacant seats in IT and computer training courses, could stay on the same path and maintain its focus on the corporate world. But this won’t be cheap either — sales must increase for profits to grow, which means investing in a salesperson without any guarantee of returns.

At the moment the business is profitable, but cash is tight, and the company can’t afford to make a strategic mistake. Either route will require a significant expense, and likely require taking on an investor.

Founded in 2005 by Louis Trahan, a former marketing executive, Last Minute Training claims to help vendors improve profits by turning empty seats into sales, while giving career-climbing course participants the chance to gain in-demand knowledge, often at a discounted rate.

It’s a valuable matchmaking service, especially for training providers with fixed overhead costs.

“You have to put bodies in seats because you have rent, you have structure costs,” says Trahan. Last Minute Training pools together those vendor courses and draws in buyers — mostly professionals looking to polish their skill sets — by offering discounts, which start at a minimum of 20 per cent. The company earns its money through course posting fees, buying and reselling courses, and sales commissions.

This business model has seen Last Minute Training grow from zero to five full-time employees over the past 8 years. Trahan estimates sales will increase from $1.3 million in 2011 to $1.5 million in 2012. His ultimate goal is to perfect Last Minute Training’s service offering in Canada and then expand into the US, allowing the company to ramp revenue up to $15 million within 3 to 5 years.

That’s a small piece of a very big pie: according to industry website Trainingindustry.com, the 2011 spend for corporate and government training activities in North America was approximately $130 billion.

Trahan sees two paths ahead of him. By becoming a broader online marketplace that caters to consumers and includes personal development training – such as photography and cooking classes – the company could become that “Kijiji of training,” and gain a much larger, and more profitable, customer base.

This path is complicated. Trahan’s model is similar to that of last-minute travel websites. But they’re plugged into central booking systems for airlines and hotel chains. Training providers use a variety of systems to fill seats, meaning no similar system exists for Trahan’s company. As a result, Trahan’s staff have had to input all 8,000 courses listed on their website manually.

“The information can’t be 100% accurate because we don’t have a live connection with a registration system,” explains Trahan.

By increasing the volume of courses available, he would also have to greatly increase his overhead by taking on more staff to enter all that data and keep the website up to date.

To solve this problem, Trahan is considering building a proprietary training inventory system at an estimated cost of $250,000. This would probably require finding an investor, which Trahan would rather avoid.

His second option is less radical — keeping the business essentially the same, but expanding his sales staff to find new, and better serve existing, corporate training customers. Trahan hopes a full-time salesperson can move about $3 million a year worth of courses by focusing specifically on large corporate accounts. But he estimates it would cost over $100,000 to pay and train a professional salesperson, and take up to a year before the company sees an impact on revenues.

The costs are so prohibitive that failure to generate such high results could prove to be a drastic setback. And Trahan can’t be sure if his sales estimates are realistic or overly optimistic.

“$3 million a year is more than double his current total revenues, which have taken him 8 years to build,” says Jim Stewart, founder of Toronto-based business strategy firm ProfitPATH.

And finding investment is a challenge, especially if Trahan decides to shift his business model.

“Shifting from B2B to B2C is big step for any company,” says Stewart, adding that Trahan “will struggle to attract investment (without a) clear growth path.”

Trahan, for his part, remains undecided.

“If (either option) doesn’t work, it’s a really tough pill to swallow,” he says, but “sometimes you just need to pick a direction and move forward.”

Then he says, he has one question to ask.

“If you miss, do you have enough reserves to try again?”


EXPERT VIEWS

As Interviewed by: Tom Henheffer

Trahan bills himself as the largest in the segment, and it seems to be true. But the fact that he only has $1.5 million in revenue tells me it’s a very small, fragmented market. And if he’s thinking about bringing on an investor and is so worried about $250,000, he probably doesn’t have much cash on hand. All of this combined means the business model most likely isn’t scalable. Because all the data has to be entered by hand, offering a broader range of courses will only serve to increase his problems and his overhead. Expanding into the US market, which is probably even more fragmented, will cause the same issue. And if it’s taken him eight years to get to $1.5 million, it just isn’t realistic to think a single salesperson could double those numbers. But he doesn’t necessarily need to expand. If Trahan’s making a decent living now, he should concentrate on maintaining the business and increasing profits by becoming more efficient. It’s a viable third option, and may save him from making a costly mistake.

by Mark Simpson - GB College

If Trahan he wants to increase profits, his idea of switching to a consumer market doesn’t make a lot of sense. There’s no reason for a big, risky change, and there’s still lots of opportunity to grow on the B2B side — if the company can solve a couple of problems. The first is data collection — a lot of these training businesses don’t provide up to date information in a convenient format. But the right approach, saying ‘if you provide the right data, I’ll fill your seats,’ should quickly convince companies to hand over what he needs. The second issue is sales capacity — Trahan’s doing a lot of this work himself, and doesn’t have the time to reach out to new businesses. Hiring a salesperson can help solve both problems — he needs someone finding new leads and conveying his company’s value proposition, with a requirement for good data. Trahan is worried about the cost, but this won’t be an issue if his pay structure is based on commission. That way costs only increase if sales increase, and scaling the business ceases to be a problem.

by Dave Valliere

Trahan sees two options to increase volume, but I am not sure either is viable. Going into the consumer market with personal development courses will be a very complex move, and they’ll need more efficient systems in place to make it work. So the company may want to stick with its current model and expand geographically, whether this be to other parts of Canada or regions in the U.S. This option is more complicated than simply dealing with the expense of a salesperson. As staff have to input training information manually, expenses will increase with volume, undercutting any potential rise in profits. In other words, if Trahan really wants to hit his targets, I think he needs to take on an investor and develop the technology he’s been considering — something that integrates with the schedules of training providers and automates the data-input process. This kind of software didn’t always exist in the travel world either. By developing it, Trahan could greatly reduce his costs, up capacity, expand to personal offerings, increase profits, and become a pioneer in his industry.

by Mike Feaver - RBC

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