Monday, August 31, 2009

Is Deflation Good for Business?

Energy prices have truly influenced the global economy over the last couple of years. As gasoline prices have moved down in 2009, one result, in June 2009, was a negative annual inflation rate in Canada. This was the first time this has occurred since November 1994. Similarly, the country's Consumer Price Index (CPI) is expected to be down, marking a decline for the second consecutive year. Overall, though, core inflation is expected to remain fairly stable and close out the year at or near two per cent, as predicted by the Bank of Canada.

Analysts predict that this period of deflation is merely transitory and will likely be take in stride by markets. The Bank of Canada is expected to maintain its promise to keep interest rates at a floor of 0.25 per cent until next year, assuming that inflation remains stable.

As the deflation is attributed to the movement in gasoline prices, the effects are not considered to be ominous. The Bank of Canada had predicted that there would be a period of falling prices, but also predicted that the effects would taper off towards the end of the third quarter of 2009.

When the rather volatile gasoline prices are removed from the inflation index, the country's economic factors are fairly stable. During the recession, some economists described to the core inflation rate as "sticky." Despite the weakening of the economy, the Canadian dollar was fairly strong and food prices were slow to come down. Thus, the core inflation rate did not vary much. As food costs begin to drift down in the coming months, they are expected to bring down the core inflation rate.

Incorporate in Canada with
Click. You're incorporated ®

Sunday, August 30, 2009

How to Reduce Your Business Costs

Desperate times call for desperate measures.

This old adage has become the modern modus operandi for many companies. As many companies have had their operating budgets reduced, the time has come to re-think how to operate a business. Specifically, is it possible to continue serving one's customer base on a reduced budget?

The answer is a resounding yes. The key to successful continuation of one's business operations requires re-featuring, not actual cost cutting. Understanding what the customer really wants and what can be done without is the best way to re-feature. This will allow the business owner to provide the goods or service while lowering costs at the same time.

A careful evaluation of one's business is crucial. Take the time to carefully evaluate which areas of the business should be highlighted, owing to their profitability, and which areas should be downplayed, as they truly don't matter as much to the customer. By reducing or removing non-essential services, improved pricing can be offered to the customer, thus strengthening customer loyalty.

It may be time to evaluate your raw materials. Is it possible to change to less expensive raw materials without compromising quality? Similarly, while few people want to dismiss staff, is your staff being utilized to the optimum? Some services can easily be offered to the public via internet services, thus freeing your human staff for tasks that computers cannot perform.

Rarely is cost cutting an enjoyable task. However, by figuring out the best and most innovative ways to improve your productivity and profitability of existing services, products, and processes, cost cutting is an inevitable positive by-product.

Incorporate in Canada with
Click. You're incorporated ®

Thursday, August 27, 2009

Negative Reviews about your Business are Positive

It may sound illogical and absurd but analysts and businesses alike have found that inviting negative criticism can be used to your advantage.

While negative criticism of a service or product is hardly a novel concept, providing a forum for, and encouraging, this type of feedback has only recently come into vogue. Online businesses, which have highly accessible conduits of information, have learned that negative reviews by customers need not be damaging. In most instances, the customer has a legitimate concern. Listening and responding to the customer may be in the best interest of the business. For example, a customer who has used a product may be able to suggest a subtle improvement that will seriously enhance the product. If several customers make the same or similar suggestion, the prudent business owner may be wise to employ this suggestion. Similarly, the average consumer is aware that opinions are as different as people. However, being able to express that opinion, and knowing that it is being listened to, is extremely important.

While many websites print customer reviews, the savvy buyer knows that only glowing reviews of a product or service are hardly unlikely. Studies have shown that less than 25 per cent of only shoppers will not consider shopping on a site that contains some negative reviews. On the other hand, similar studies have shown that customers are most likely to shift their loyalty to sites that have responded to complaints or criticism, offering either compensation or replacement. The finest product has no value without purchasing customers. Listening and responding to customers is an ideal way to secure their loyalty. Another study recently concluded that customers want to know if a product has any weaknesses. It helps set realistic expectations of a product. In an imperfect world, we all learn to cope with reality. Online shopping is a major part of our world and business owners should not forget that real people are shopping in their virtual stores.

Incorporate in Canada with
Click. You're incorporated ®

Wednesday, August 26, 2009

Innovation and Technology are Top Priorities

Summing up the recent annual conference of Canadian provincial premiers, the nation's provincial leaders called upon the Federal government to bolster innovation and technology. The premiers are in agreement that removal of provincial tax benefits to companies will seriously dampen research and development. Encouraging R&D, both small and large scale, will eventually translate into economic growth through increased jobs and commerce.

The premiers were also in agreement that the country must adopt a new strategy regarding water management and conservation. Water is the country's most important resource. It was agreed that the nation is not doing enough to protect and manage this vital commodity. A bold innovative strategy must be implemented to protect Canada's water.

Pensions for Canadians were another topic discussed at length by the premiers. There is growing concern among the provincial leaders that the majority of Canadians with annual incomes below $100,000 will have insufficient funds to retire. This includes a large number of baby boomers who are approaching retirement age in the near future. However, the premiers lack unilateral agreement on how to solve this problem. Various measures suggested included increased public pensions and tax credits to bolster and encourage personal savings. The provincial finance ministers are compiling various plans and suggestions. The premiers are hoping that the federal government will convene a pension review summit by the end of 2009. This summit would be attended by both federal and provincial representatives, as well as leaders from the banking community and private pension companies.

The premiers' conference also touched upon the topic of unemployment and benefits. However, no concrete recommendations were made and this area of national concern remains in the hands of the federal government.

Incorporate in Canada with
Click. You're incorporated ®

Tuesday, August 25, 2009

Global Business Outlook: Canadian Economy Ranks High

While the global recession is still a major economic factor in many countries, the Canadian economy is rebounding very well. A stable banking sector combined with lower employment, have contributed to Canada's recent rise in global economic standings.

According to annual rankings by the Conference Board of Canada, the Canadian economy ranked 11th of 17 developed countries in 2008. However, based on current forecasts by the Organization for Economic Cooperation and Development (OECD), the country's ranking is expected to catapult to 5th place in 2010. The OECD's forecast for growth, unemployment, and various other economic factors revealed that Canada is expected to rebound from the global recession at a rate that far exceeds many other developed countries.

Both the United States and Belgium are also expected to rise in global economic rankings. However, Switzerland, Britain, and the Netherlands are expected to fall. Norway was ranked in first place in 2008 and is predicted to remain in first place through 2010. This high ranking is attributed to the country's large petroleum sector as well as its resilient economy. At the bottom end of the scale is Ireland whose 17th place economic ranking is expected to continue into 2010.

Although Bank of Canada Governor Mark Carney recently announced that the recession is over, many unemployed Canadians would disagree. On the other hand, consumer confidence has displayed an upward trend since the beginning of 2009. As well, investment portfolios have begun to recover, housing prices have risen, and the key lending rate in Canada is at an historic low.

Incorporate in Canada with
Click. You're incorporated ®

Monday, August 24, 2009

U.S. Economic Stimulus Plan Harms Canadian Business

While the U.S is struggling to recover economically from the global recession, certain measures enacted by the American government to bolster the struggling U.S. economy may harm Canadians as part of the price.

Canadian leaders, including the provinces' premiers, are united in their opposition to the "Buy America" provision in the U.S. economic stimulus package. The "Buy America" provision in the landmark $787 billion stimulus package states that government contracts in the U.S must use only products made in America. For Canadian manufacturers of iron, steel, and other manufactured goods that would be used in public works and building projects funded under the U.S. stimulus package, this translates into almost $280 billion that cannot enter the Canadian economy.

While Canadian leaders are quick to embrace the spirit of recovery of the nation's largest neighbour, they are quick to point out that a large portion of Canada's manufacturing industry is based upon trade with the U.S. The provincial leaders are supporting the federal government's efforts to exempt Canada from this controversial clause in the U.S. economic package.

Some provincial leaders, as well as representatives of the industrial community, fear that the "Buy American" clause may force some Canadian industries to relocate to the U.S. in order to survive and continue manufacturing. In a sad irony, some Canadian manufacturers have recently seen a large increase in orders from the U.S., fueled by economic stimulus funds. However, while the increase in business is encouraging for the Canadian economy as well, the orders may have to be produced in the U.S. in order for the funds to flow to both the U.S. and Canadian companies.

Some Canadian companies have considered a boycott of American products in retaliation. However, a major shift in U.S. policy will only come to be at the national leadership level.

Incorporate in Canada with
Click. You're incorporated ®

Sunday, August 23, 2009

It's All in the Cards

Believe it or not, there more to a business card than meets the eye. In the highly competitive market of job searching, a custom designed and creative business card can make the difference between obtaining an interview or just becoming another face in the crowd.

Many people prepare business cards containing personal information and nothing more. However, when your goal is to be noticed, presenting a unique calling card may be just what is needed to get you noticed.

Potential employers are continually approached by job seekers. In today's recession, the numbers are with the employer. They can take their pick from a large number of qualified applicants. Therefore, it is imperative to make a noticeable first impression.

A standout business card should quickly and effectively communicate who you are and what you can contribute to an organization. The first glance should grab the reader's attention. A tag line or several bullets will get your message across. Don't restrict yourself to one colour. The human eye is attracted to differences so choose a different colour ink to highlight the key points.

Many people forget that a business card is two sided. Quite often, a potential employer will use the back side of the card to jot down notes about the person he has met. Be one step ahead and print a mini-resume on the back. But, don't make it too busy. If the letters are too small, no one will read it.

Think carefully about the look of your business card. Don't cut corners by preparing it at home. The card should be printed on a proper card stock and cut by machine. Maintaining a professional look is crucial. Nothing could harm you more than a well prepared card that has an at-home, arts and crafts look to it.

Look is important but so is size. Most business cards are standard size. Cards that are shaped differently or are too large may be noticed but may also be discarded, as they will not fit into standard card holders.

Investing some thought, time, and money in your business card may be the right step in securing your next job.

Incorporate in Canada with
Click. You're incorporated ®

Thursday, August 20, 2009

An Economy Divided

The global recession has literally divided Canada into two halves – stable economic sectors and slumping sectors.

Canada's service industry has been extremely resilient and has weathered the economic storm surprisingly well. Service industries including finance, insurance, health care, real estate and construction dropped approximately 1 per cent last winter but have since rebounded rather well. Employment in the services sector has been fairly stable as well. Although construction output and jobs had fallen at a somewhat greater rate than other services, these, too, have stabilized and are showing improvement. Sales of existing homes are showing record levels. The service sector's strength is attributed to its self reliance, rather than dependence on external global factors.

On the other hand, Canadian manufacturing is in desperate shape. Its dependence on foreign, rather than domestic, concerns may not portend well for Canadian manufacturers in the hear future. Key production concerns in Canada include base metal mining, aluminum production, and auto and aerospace manufacturing. As foreign buyers continue to reject Canadian made products including cars, planes, metals and other industrial products, shipments and sales have continued to slide to the lowest levels in the last decade. The lion's share of this decline has been felt in Canada's industrial heartland – Ontario and Quebec. Indeed, Canada's manufacturing numbers were far worse than figures released for U.S. industrial production. About 11 per cent of Canada's industrial workers – some 220,000 employees have lost their jobs due to the economic slump.

Despite early signs of global recovery, the strength of the Canadian dollar has made Canadian made products more expensive relative to foreign-produced products. Thus, foreign purchases are being directed to lower priced products.

The current trend in the manufacturing sector is not expected to show signs of improvement until well into 2010.

Incorporate in Canada with
Click. You're incorporated ®

Wednesday, August 19, 2009

Creating Jobs and Saving Businesses

Thanks to the Canadian Government's recent investments in the Business Development Bank of Canada (BDC) through the Business Credit Availability Program, the BDC is experiencing a record increase in loans to businesses across the country.

By improving access to credit for Canadian businesses via the Canada's Economic Action Plan and Business Credit Availability Program, the Government is helping the business community not only weather the current economic slowdown but continue to thrive.

Recent statements by Canada's Minister of Industry, Tony Clement, indicate that the Government is pleased with its economic stimulus program. The various programs are creating jobs and saving businesses.

The BDC's increased lending activity has been felt across the country. In June 2009, the amount of loans accepted exceeded figures for the same period in the previous year by 57%. In the first fiscal quarter of 2009/2010, ending June 30, the total dollar amount accepted by BDC loans escalated by 37% from $738 million in 2008 to slightly more than $1 billion in 2009. The BDC reports that this has been the largest increase in its history.

The Canadian Economic Action Plan was designed to assist businesses and entrepreneurs by improving access to financing through enhanced cooperation between government corporations and private sector financial institutions. Financial experts from the BDC have worked closely with their private sector colleagues to ensure that solutions are found to secure funding for creditworthy businesses. Another branch of the Business Credit Availability Program is Export Development Canada (EDC). Working together, EDC and private sector financial institutions are providing more than $5 billion in loans and other credit support to businesses with viable business models but whose access to financing might be restricted.

Private sector and Government – working together to help Canadian businesses thrive.

Incorporate in Canada with
Click. You're incorporated ®

Tuesday, August 18, 2009

Alternative Financing For Your Business

The story is much the same for many a small business looking for credit today. After all, credit is the oxygen that many businesses rely upon. Traditionally, the source of that credit was the bank. However, the times are changing and many businesses have begun to realize that banks may not be the best resource.

In order to stay afloat, banks have made their lending procedures quite rigid. The rules and criteria are simply not realistic for many small businesses. As such, several unconventional forms of financing are available to small businesses. Business owners admit that they may make less money but unconventional financing allows them to maintain their businesses during these rocky times.

An asset-based loan (ABL) is one such form of financing. Most applicable for a manufacturing business, this type of loan allows the owner to use existing merchandise as collateral for the loan. Customers order new merchandise based on the existing products. In the worst case, the owner would have to sell his inventory to repay the loan.

Another method on the market is contract financing. In this scenario, the lending institution finances the purchase order, rather than the manufacturing process. After completion of the transaction, the lender receives an agreed-upon percentage of the profit.

The need to seek alternative financing methods has forced small business owners to carefully examine their businesses. After all, if the business was stable, there would be no problem securing bank credit. The banks are in the business of lending money that will be repaid. The silver lining in the cloud is that small businesses are becoming more professional. In the long term, this can only benefit them and the financial community.

Incorporate in Canada with
Click. You're incorporated ®

Monday, August 17, 2009

The Value of Customer Service

At the end of the day, your product may be outstanding and you may provide terrific value, but, let's face it, times are tough for small businesses. People are spending less today. Many businesses have limited funds available to maintain or increase sales. What, then, is a business to do? The answer lies with your most important resource: your customers.

It all boils down to customer satisfaction and customer loyalty. Maintaining your customer base is vital. Therefore, it's important to know what the customer is thinking. Businesses have to establish methods to listen to their customers and, no less important, to respond. Customer feedback should be viewed as a gift to your business.

Far too many businesses have become unreachable, preferring to communicate with their customers via text messages or e-mails. They have forgotten the importance of the personal touch. When was the last time you initiated telephone contact with a long standing customer to see why they have reduced their orders? One telephone call may be a terrific investment. You may discover that the customer has new needs or has been upset by a small matter that you were unaware of. Informal surveys can provide a wealth of information to help strengthen your business.

Business owners should not fear confrontation with the "disgruntled customer" as opening a Pandora's Box. Studies have shown that most disgruntled customers will not voice their opinion but will simply take their business elsewhere. Only 4% of disgruntled customers have mere complaints. Most have legitimate issues. The same studies have concluded that a 5% increase in customer loyalty can have a direct positive long term increase on a company's bottom line by anywhere from 25% - 125%.

The business owner who invests time in customer service is making a wise investment in these difficult financial times.

Incorporate in Canada with
Click. You're incorporated ®

Sunday, August 16, 2009

Knowing the Value of Your Business

All too often, business owners will plan their retirement and estate based on their own personal valuation of their business. After all, could there be anyone more qualified than the owner to truly know how much the business is worth? The answer, surprisingly, is a resounding yes. According to experts, a business owner's self appraisal and evaluation of his company will generally be well off the mark on the high side. Business owners will allow their emotional and personal attachments to the business override their objective opinions, thus producing end results that may be quite inaccurate.

The best course of action is to retain a professional valuator. The valuator – generally an accountant – will work the numbers and forecast accurately. Objectivity is essential. The owner will look at where he has been and what he has accomplished. The valuator can take all the facts and figures and see where the business will be. For example, a valuator may conclude that the business is the life's work of an individual and the owner is the company. Remove him from the picture and the value of the company will plummet. This is often the case with small businesses. On the other hand, a larger business with multiple shareholders may have developed a succession plan. In this instance, the valuator will clearly see that a working plan is in order to allow the business to continue, even after the owner is no longer in the picture.

It is important to note, though, that business valuation is an art, not a science. Two valuators can arrive at different conclusions for the same business. The reason is that the valuator must make future predictions based on the present numbers. There is always a possible margin of error.

Be that as it may, a professional business valuation is an excellent tool to help business owners assess their company's worth with no emotional strings attached.

Incorporate in Canada with
Click. You're incorporated ®

Friday, August 14, 2009

Beyond the Southern Border

Historically, the United States has been Canada's dominant trade partner. With its relatively limited domestic market and vast resources, Canada has been quite dependent on exports to the U.S. However, the global economic recession has changed this reality, at least for the interim.

In fiscal year 2000, approximately 87 percent of all Canadian exports were to the U.S. Recent figures show a drop to almost 71 percent.

Politicians have long advocated diversification of trade relations as insurance against a serious drop in trade with the U.S. Now that reality has dictated a change, many Canadian companies are experiencing a drastic rise in income largely due to overseas trade partners that previously had not been considered.

While Canadians hope for a resuscitation of the U.S. economy, as export costs to the U.S. are far less than distant foreign addresses, the amount of trade with countries in Africa, the Middle East, and Asia has provided economic recovery for many Canadian businesses.

Canadian Prime Minister Stephen Harper has targeted the Chinese market as a partner for Canadian trade and will pursue the issue on an official visit to China later this year. In addition, his government is presently negotiating a trade deal with the European Union.

Most economists agree that the U.S. economy will rebound from the current recession, albeit not as quickly as Americans would like. In the interim, the Canadian economy is moving forward and has found new addresses to further trade. Having discovered these new lucrative markets, it is unlikely that Canadians will return to the high level of dependence on trade with the U.S. The global economy is maturing and Canadian resources are playing a vital role in this process.

Thursday, August 13, 2009

Swim Before You Sink

The downturn in the economy has created "economic collateral damage." Small and medium-sized businesses have been forced into bankruptcy due to the credit problems of their customers, even though their businesses were solid.

Insolvencies in Canada rose 20% from January 2008 to January 2009. As such, many companies are currently at risk.

Experts state that even the best run businesses, with exemplary credit practices, cannot ignore what is happening around them. This is the time for companies to stop being "Mr. Nice Guy" and tighten credit policies with customers.

A common problem is that many business owners have signed personal guarantees to their banks in order to receive company loans. As they begin experiencing problems, they order large amounts of unpaid inventory and leave it for the bank to sell in lieu of repaying loans. The supplier is often the big loser.

Business owners should consider tightening the credit lines with their customers. Don't get caught with over-extended credit to a customer, even those that have been loyal for years. Circumstances may change that long standing relationship.

Credit checks should be conducted periodically. It may be wise to start using written contracts, rather than the informal handshakes of days gone by. If necessary, one should get indemnities or personal guarantees from customers. Essentially, a small pr medium-sized business wants to avoid being an unsecured creditor, should the customer close its doors. "Be prepared" is the credo of modern business credit practices.

One should also diversify, both in suppliers and customers. Being dependent on one primary supplier or customer can be extremely risky. Try to keep one step ahead of the game and put your own business interests first. Keeping one eye open at all times can prevent disaster.

Incorporate in Canada with
Click. You're incorporated ®

Wednesday, August 12, 2009

Small Caps Lead the Way

Is the global recession behind us? There are as many answers as there are doubts. But, Canadian investors seem to be optimistic about economic recovery, and are displaying their optimism through investments that may be considered slightly risky in uncertain times.

Canadian investment dollars have been flowing into small cap companies. Small cap refers to stocks with lower market capitalization. Small cap companies, (the average capitalization being around C$370 million), took a severe beating in the recession. When the financial world did not come to an end, these stocks bounced back more than others, due to their severe drop.

Lower prices have certainly attracted investors to the small caps. However, true believers in global economic recovery have been willing to take on the larger risk of these stocks, believing that the risk will produce a handsome profit.

This is not to say that all small caps are attractive to investors. The wise investor still must pick carefully. Investment analysts state that small caps in energy, materials, and consumer discretionary sectors are proving to be the most attractive. In fact, energy and materials comprise roughly half the weighting of sectors in the BMO Small Cap Index. The index monitors and rates a portfolio of around 400 companies valued at nearly C$150 billion.

The future is still uncertain. However, investors seem to indicate that there is reason for hope. Several months ago, many economists and investors feared that global economic collapse was on the horizon. Based, though, on recent investment activity, many are beginning to see rays of sunshine on that same horizon.

Incorporate in Canada with
Click. You're incorporated ®

Tuesday, August 11, 2009

Deferring Tax to the Next Generation

No doubt many independent business owners have seen their company's worth decline in the last year. However, chances are very good that the value will rise again. If the company owner thinks that the rise will be substantial over the next few years, there is a wonderful opportunity to take advantage of a unique tax savings and defer the capital gains tax on the projected growth to the next generation.

The method is known as an "estate freeze." Essentially, the "freeze” caps the share price of the owner. Any future growth in the share price is passed on to the next generation of shareholders.

The method is as follows: the owner of the business gives his common shares to the company and takes back an equal amount of preferred shares. These preferred shares can issue dividends to the owner, thus allowing him livable income. Meanwhile, the common shares are issued at nominal value to the future owners, whether it may be family members, employees, etc. From that point forward, growth in the company is accrued to the new shareholders. Should the owner die, calculation of the capital gains tax is based on the value at the time of the freeze, not the accrued, increased value. This can provide a substantial savings on capital gains. Numerous companies have become financially strapped having to pay large capital gains taxes. The estate freeze can greatly reduce that tax bite.

Some companies have already done "re-freeze" while others have added trusts that name beneficiaries who will own the common shares in the future. All these moves are intended to reduce capital gains taxes, now and in the future, as much as possible.

Incorporate in Canada with
Click. You're incorporated ®

Monday, August 10, 2009

New Brunswick's Less Optimistic Tax Savings

Much fanfare accompanied the New Brunswick government's tax cuts that took effect July 1 of this year. After the dust settled, it appears that less money is returning to the province's residents than was originally advertised.

Premier Shawn Graham promised a "pleasant surprise" to residents on their pay stubs beginning in July. While there have been some changes for the better, they are far below what the premier promised. According to leading tax analysts, the tax cuts are as much as 25 per cent less than promised.

While the tax cuts will verify based on individual income, many residents have said that the net difference is so negligible as to not have any effect on their habits.

The provincial Department of Finance does admit that the figures quoted by the premier included a reduction from an old Progressive Conservative government tax break that takes effect every January 1, beginning back in 2001.

The current government's 2009 budget included numerous budget cuts to various departments and a two year wage freeze for public sector employees. As both these items were unpopular, though necessary in order to tackle a large provincial budget deficit, it was hoped that the tax break would soften the blow. The budget included the first part of an economic stimulus package by adjusting both personal and corporate tax rates. By 2012, the province will have two personal income tax brackets. The maximum tax will be 12 per cent. In the meantime, residents feel that they have not been adequately compensated for the budget cuts.

Incorporate in New Brunswick, Canada with
Click. You're incorporated ®

Thursday, August 6, 2009

The Pick of Professionals

While some companies coast-to-coast have been downsizing as a reaction to the slump in the national, and ultimately global, economy, others have found that this is the ideal time to recruit professionals at senior and executive levels. In essence, some companies have realized that this is the time to turn the economic downturn to their advantage.

A large number of highly qualified people are ready and able to work. Through no fault of their own, they have been laid off, as companies have had to make extremely hard decisions in order to maintain a balanced budget in challenging financial times. The result is a deficit in cash but a surplus in talent. Thus, CEO's with a sharp eye are using this opportunity to shop for top talent that can ultimately add to their corporate team.

Not only are recently dismissed professionals available to work. Companies are unabashedly recruiting top talent from the active workforce, seizing the opportunity to woo top-tier professionals to their management teams. In this new era where job security is rapidly becoming near extinct, top executives are open to offers.

As Canada is rapidly emerging from the recession, companies with an eye to the future are adding talent to their teams in order to strengthen their corporate positions. An impressive list of available talent is ready and able. Similarly, not only has active recruiting become the order of the day. Whereas companies had difficulty soliciting top level resumes as little as two years ago, today those same companies are able to take their pick of qualified applicants. Similarly, the wide variety of available talent has afforded companies the opportunity to add new skills to their management teams.

Incorporate in Canada with
Click. You're incorporated ®

Wednesday, August 5, 2009

HST Coming to BC

British Columbia Premier Gordon Campbell has announced that his province will be introducing the Harmonized Tax (HST). The province will harmonize its provincial sales tax (PST) with the federal GST creating a single 12 per cent sales tax. The new tax is scheduled to come into effect July 1, 2010.

B.C.'s HST will be the lowest in Canada, noted provincial Finance Minister Colin Hansen. The province does admit, though, that the new tax will increase the cost of some services in the short term, as these were previously exempt from the PST. However, government leaders explain that the new HST will boost investment and ultimately cut costs.

Addressing the possible rise in prices, Mr. Hansen explained that the PST is often embedded in the price of goods, such that the consumer does not see it at the register. He feels that the cost savings for businesses, resulting from the new tax, should be passed on to consumers. Provincial leaders estimate that over $2 billion in costs will be removed from B.C. businesses.

Similar to the PST, the new tax will also include exemptions. The HST will not be applied to gas and diesel fuels, children's car seats, children's shoes and clothing, diapers and feminine hygiene products. The exemptions will come as point-of-sale rebates. In addition, there will be a partial rebate of the provincial portion of the HST on houses up to $400,000. These houses will bear no more tax than under the current PST and houses above this amount will benefit from a flat rebate of approximately $20,000.

The federal government has pledged $1.6 billion in transitional funding as well as paying for the full cost of administration, thus generating an additional $30 million in savings annually to the province.

Incorporate in BC, Canada with
Click. You're incorporated ®

Tuesday, August 4, 2009

Franchise – The Final Frontier

For a large number of mid- and senior-level business managers and executives, the current recession has brought something they didn't readily envision – layoffs and unemployment. Job security is no longer a given benefit at their corporate level. The former wealth creation strategies – registered retirement savings plans, pensions, real estate, stock portfolios – have ceased to become guaranteed. Age discrimination, now known by the politically correct term "over-qualified", is a key player in the corporate world.

This new trend does not seem to be a short term solution to the current recession but, rather, a change in employment attitudes and management strategies. As a result, experienced executives have also changed their attitudes. They have come to the realization that the time has come to control their own destinies and become their own bosses. The best investment is investing in number one.

Rather than starting out and building new companies from the ground up – a lengthy and often expensive process, white collar professionals are applying their skills to "white-collar franchises." The greatest asset these executives have is a wealth of intellectual capital – management skills, marketing, communications, human resources, strategic planning, and more. Purchasing and operating a "white-collar" franchise – not the traditional fast-food outlet or convenience store, allow these skills to be applied to a situation where the manager is his own boss.

Fortunes can be made in a recession. This is the right time to pursue self-employment. Labour costs are down and there is a large pool of available talent. Real estate prices have fallen. Finance rates – for those with good credit – are lower. In all, overhead for a business is much lower. Combine this with top management skills and one has a winning combination for a successful business through franchising.

Incorporate in Canada with
Click. You're incorporated ®

Monday, August 3, 2009

Here Comes the Sun

Brighter days are on the horizon, according to leading financial experts in Ottawa. Canada is emerging from the financial recession. According to recent statements to reporters by Federal Finance Minister Jim Flaherty, the Canadian economy has stabilized and recovery has started. Mr. Flaherty noted that consumer confidence is relatively strong and continuing to grow. This is reflected in improved retail sales and positive numbers of home sales. He added that nearly 1000 infrastructure projects are currently underway across the nation.

The Bank of Canada strongly supported Mr. Flaherty's statements, forecasting that the economy will bounce back much faster than that of the United States. The Bank predicted that the summer quarter should produce growth of almost 1.3 percent, following three consecutive quarters of contraction.

Bank of Canada officials cautioned, though, that Canadians should not become overly optimistic, and should keep the country's financial recovery in proper perspective. The tenuous financial positions of both the U.S. and Europe may continue to affect Canadians. Canadian government stimulus spending must also be rescinded at the proper rate in order to not be counter-productive.

Canada has not incurred massive deficits in recent years, thus contributing to its relatively strong financial position and its ability to recover from the recession in a shorter period of time than others. Leading bankers in the U.S. are also predicting recovery for the American nation. However, due to massive government debt, the fragile American economy has been slower to recover. The decline of the American economy has slowed its pace and analysts predict that growth will begin in the latter portion of this year.

Incorporate in Canada with
Click. You're incorporated ®

Sunday, August 2, 2009

When Will the Economy Be Stable Again?

This is the question on the lips of many economists and regular citizens alike. According to the Bank of Canada, the economy is in an upswing. However, complete recovery, or a return to economic levels prior to the recession, should not be expected until mid-2011.

Although economic indicators are showing upward trends, restructuring in major industries such as auto and forestry – to name but two of many – will take some time, thus slowing economic activity. Another key factor is the increasing strength of the Canadian dollar. The return of a strong dollar – currently trading at nearly 91 cents U.S. - will hold back exports. Mark Carney, governor of the Bank of Canada, has warned that the dollar's raid rise may "fully offset positive factors" in the economy. However, economists seem certain that Mr. Carney is unlikely to intervene with the dollar's growth, thus maintaining the policy of the Bank of Canada for nearly a decade.

A strong Canadian dollar is not all bad, though, for the economy. While it increases the price of Canadian exports, conversely it decreases the price of imports. As the demand for imports is quite high, the strength of the Canadian dollar is beneficial to consumers.

Another indicator of recovery on the horizon is the decision by the Bank of Canada to reduce the amount of cash that it was injecting into the banking system. This measure was adopted when credit markets seized up in the final quarter of 2008. The banks have reduced their dependence on this cash influx, thus generating the central bank's decision. However, the Bank of Canada will maintain its commitment to provide liquidity as necessary to support the stability of the nation's financial system.

Incorporate in Canada with
Click. You're incorporated ®