Wednesday, September 30, 2009

Government Financing for Small Business

One of the most difficult results of the financial recession has been the drastically reduced amount of credit available to small businesses. Banks have become highly selective in granting loans – the lifeblood of many a business.

An important program in Canada's Economic Action Plan is the Canada Small Business Financing Program (CSBFP). This program is designed to help small and medium-sized businesses access financing. For-profit enterprises with gross annual revenues of $5 million or less may be eligible for loan amounts up to $350,000 and $500,000 for real property.

The CSBFP is administered by Industry Canada in partnership with private sector lending institutions across all the provinces and territories. In total, more than 1200 service locations have been established to facilitate business owners seeking loans. The government does not participate in the lending process, nor does it make the decisions. The final decision is solely at the discretion of the financial institution. However, in order to encourage lenders to make loans that they otherwise might not, the federal government will cover a portion of losses due to default. A lending institution with a portfolio greater than $500,000 will be eligible for reimbursement of losses up to 12 percent of its portfolio's value.

Loans to small and medium-sized businesses are not guaranteed under the CSBFP. Business owners should discuss their needs with a financial officer at a participating financial institution. Upon approval, the loan will be registered with Industry Canada.

This program is not available for farming businesses, not-for-profit organizations, or charitable and religious organizations.

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Tuesday, September 29, 2009

Small Business – Less Tax

However you dissect the finances of a business, specifically a small business, cash is the primary component of the bottom line. The more cash in the coffers, the more flexibility the business has.

The current global recession has dealt extremely harshly with Canadian small businesses. Reduced sales and credit restrictions have pummeled the cash flow of many worthy enterprises.

The Canadian government, seeking to ease the plight of this important and large sector of the country's business community, has established several stimulus programs through its Economic Action Plan to provide much needed economic relief. Realizing that continued growth of small business is dependant upon available cash, the federal government has passed legislation that increased the amount of small business income eligible for a reduced federal tax rate of 11 percent. Effective January 1, 2009, the eligibility cap was raised from $400,000 to $500,000. Canadian-controlled private corporations that claim the small business deduction are eligible for this credit. By increasing the eligible income by 25 percent, the federal government is helping small businesses retain more of their hard-earned cash. This, in turn, will help stabilize the business community, create new, much-needed jobs, and promote economic growth throughout the nation. It is estimated that this reduced tax rate will cost the country more than $120 million over the next two years. However, with nearly half a million Canadians out of work, it is a wise investment and money well spent.
Canadian businesses can obtain detailed information from the applicable federal government agencies.

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Friday, September 25, 2009

When Business Needs Cash

Strangely enough, the best and easiest time to raise cash for your business is when you don't need it. Cash and credit are the lifeblood of any business. However, when your business is in serious need of a cash injection, that is the hardest time to secure a loan. Raise cash for a rainy day when you're flush.

Lending institutions are in the business of making a profit on money that they lend. Therefore, a strong business is a far better prospect than a troubled one. The stronger a business' position, the better the terms it can secure on financing. Thus, when your business least needs a cash influx, go shopping for money. Proudly walking in the door of a financial institution with one's head held puts you in the driver's seat. Even in today's markets when banks are being far more selective, they prefer lending money and providing credit to strong, secure businesses. A smart bank seeks to limit its risks.

Experts suggest taking several advance steps while you're on strong financial footing. For example, draw down your credit line if you fear that rocky times are ahead. You may pay interest on unused funds but that's preferable to having the bank cancel an unused credit line.

While your company is still in its infancy, raise as much capital as you can from a variety of sources. It may be easier to sell your idea on paper rather than after reality sets in. Your initial excitement may be contagious to potential investors so use that to its maximum. New businesses often take time to show positive results. That early cash may help you get over the humps.

Be sure that you have a strong grip on your business. Learn to read the signs of impending problems and secure your financial grip before the situation becomes precarious.

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Thursday, September 24, 2009

Shareholders Determine Executive Compensation

It's commonly known as say-on-pay policy. In the United Kingdom and the Netherlands, say-on-pay is mandatory. Now, as Canadians desire to be viewed as doing the right thing, say-on-pay will become policy at 13 Canadian corporations beginning next year.

Say-on-pay, although sounding like the name of a children's game, is by no means a game. It is a system whereby the shareholders of a corporation get to vote on executive compensation packages. Although the policy is merely advisory, it is by no means to be taken lightly. The board of directors is not obligated to follow the express directives of the shareholders. However, the vote by the shareholders - whether to increase top executive compensation, decrease executive pay, or leave it as is – can send a clear message to the board members.

In countries that regularly implement a say-on-pay policy, top company executives invest a good deal of effort to court shareholder votes. While they certainly have a vested interest in the outcome, the important factor is the open lines of communication between shareholders and corporation management. Regular discussion between the investors and operations is extremely important. The goal behind encouraging shareholders' input is to break down the barrier that currently exists and allow management to understand how their investors view the company's performance.

In an effort to encourage widespread acceptance of the say-on-pay policy, the Canadian Coalition for Good Governance is working on a model policy for boards to implement, including the wording of the actual resolution put to shareholders. As shareholders are likely to vote based on overall feelings and ignore the specifics, the Coalition hopes that the wording of their resolution will help shareholders focus their thoughts.

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Wednesday, September 23, 2009

It's Start-Up Time

The recession is in bloom. People fear for their jobs. The economic future is questionable. It may be the perfect time to start your own business. Though it sounds rather absurd, this may be the ideal time to become self employed. True – self employment is not easy but, in a climate where one is never certain how long they will be guaranteed a regular salary, being your own boss may provide the best security for the present and the future.

Starting your own business carries certain risks. However, by following a basic blueprint, you will start with the right foot forward.

Before all else, prepare a business plan. Put your ideas, thoughts, research, and projections in writing. This will help you review your proposal as well as become an important document for outside investors.

The best idea can fall flat if you can't sell your product or service. Conduct your market research before you hang out your shingle. Carefully identify your potential customers and calculate whether a viable market exists. Don't be shy about seeking advice from more experienced players in the field.

Small businesses can readily get bogged down in government bureaucracy. It is wise to consult with experts who have dealt previously with the red tape.

Prepare a realistic cash flow projection. In the early stages of your business, check your financial statements daily. Consult with seasoned financial professionals to ensure that your projections are on the mark. You should be projecting the first two years in advance.

It may be difficult to raise the initial seed capital for your business. Most likely, friends and relatives will be the best address, as will former entrepreneurs who can appreciate where you are. The banks will likely wait until you are up and running.

Finally, we live in a world dominated by the internet. However, keep in mind that it is merely a technical tool. The success of your business depends on your personal effort and input.

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Tuesday, September 22, 2009

Are You Prepared for Retirement?

If you are a small business owner, the answer to this question may be a resounding "no." In studies conducted recently by the Royal Bank of Canada (RBC), the RBC surveyed small business owners across Canada. Almost a quarter of small business owners expressed a desire to retire within the next five years. However, only a small number are properly prepared or have any idea what the impact will be.

One of the primary stumbling points for retirement planning by small business owners is the question of succession planning. In the business world, transfer of the company to the next generation within one's family is most common. Only a third of small businesses survived succession to the next generation and only one third of these businesses were then passed on successfully to the grandchildren.

It is not always a question of poor planning. It may be that one's children are not qualified to take over the helm of the family business. Or, on the other hand, they may simply not be interested.
Sometimes, the founder is the business. Remove that dominant figure and the business ceases to exist. If one built a business and failed to make financial plans for leaving the business, he could face serious financial problems should the business cease to function.

The RBC study revealed that 62 per cent of small business owners in Canada were age 50 or older. This translates into a large number of future retirees in the next decade that must start planning for the golden years as soon as possible, if the transition from business owner to retiree is to be smooth and well provided for.

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Sunday, September 20, 2009

Alberta Faces Record Deficit

With natural gas prices continuing to fall, Alberta's energy boom has come to an end. The immediate result is a growing deficit that has no immediate relief in sight. The latest forecast, revised from earlier predictions this year, indicate a record $7 billion deficit by year's end. Some economists believe that continuing weak gas prices will send the deficit above the $8 billion mark. This dour prediction is based on the assumption that the province is being overly optimistic about tax revenues. It is widely believed among economists that corporate taxes will fall well below figures recently published by the province's Progressive Conservative government.

Alberta's Finance Minister Iris Evans has issued orders to provincial offices to trim $430 million from provincial programs. The government itself is seeking to trim $2 billion from next year's budget.

The province's premier Ed Stelmach warned that the deficit is likely to remain in place for at least two years following the recession. However, he also announced that the deficit will be offset by $17 billion in emergency savings in the provincial Sustainability Fund. This amount will likely deplete the fund. However, it will enable the Premier to not implement any tax increases nor will the province have to cut jobs. The weakened economy has already contributed to a predicted jobless rate of 22,000 this year. Adding to the gloomy outlook is a forecast of negative 2.5 percent growth for the current year.

Despite a sorry economic forecast, the province is pleased to note that its population is continuing to grow. Economic hardships in other regions of the nation have caused a migration to Alberta. The premier announced that his province's population is expected to grow by 50,000 residents this year.

On the positive side, the provincial Heritage Savings Trust Fund suffered a $3 billion beating when the stock markets plunged. Recently, though, the Fund has shown a $1 billion recovery, allowing the province to transfer $730 million from the Fund's profits to the province's general revenues.

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Thursday, September 17, 2009

Bank Of Canada: Strong Canadian Dollar may Reduce Economic Growth

With predictions abound of economic recovery in the third quarter of this year, the Bank of Canada has issued a warning – not its first – that the strong Canadian dollar may pose a serious threat to the nation's financial comeback.

The Deputy Governor of the Bank of Canada, Timothy Lane, recently addressed economists at a meeting of the Canadian Association of Business Economists. Mr. Lane's speech did not veer much from the official viewpoint of the country's central bank. He warned that a strong Canadian dollar will reduce economic growth and will delay the return of inflation to its target. In fact, as the bank has made certain projection in regards to inflation, Mr. Lane feared that the continuing strength of Canada's currency may force a revision of those predictions.

Mr. Lane explained that the Bank of Canada has tools at its disposal to deal with the rise in the dollar's strength. However, the Bank's options are limited, with interest rates at an historic low of 0.25 percent. At this point, the most the Bank can do is issue verbal warnings to speculators to try and steer them away from the Canadian dollar. Most economists agree that Bank intervention in foreign exchange markets is highly unlikely. Another step the Bank could do, and is highly unlikely, is quantitative easing – literally, the printing of money. Mr. Lane did not give any indications, though, that the Bank is considering this unconventional step.

One of the leading factors of the currency's rise in value is attributed to higher commodity prices, in turn leading to a Canadian recovery. Similarly, the weakening of the U.S. dollar is a contributing factor.

While Mr. Lane views global financial recovery as moving forward, and Canadian recovery as one of the leaders, he remains cautious about committing to a complete recovery in the third quarter.

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Wednesday, September 16, 2009

Canadian Taxpayers Association: Alberta Should Cut Spending

As Alberta's deficit continues to grow, political pundits and economists have much to say about the cause and effect of the province's financial woes.

According to a recognized expert at the University of Alberta, Alberta is the highest-spending province in Canada. A major blunder has been the financing of all this spending in an irresponsible fashion. The primary funding source has been income from the province's non-renewable natural resources. Non-renewable indicates that the income will stop flowing when the resources are no longer present.

A recent statement issued by the Canadian Taxpayers Association calls upon the province to cut its spending immediately. While the province intends to finance its deficit from emergency savings funds, this will literally wipe out these funds, leaving nothing out aside for a "rainy day."

Alberta Premier Ed Stelmach has stated unequivocally that he has no intention of raising taxes, nor does he intend to cut jobs from the province's payrolls. Moreover, he has announced that the province intends to move forward with $20 billion in building projects planned for the next five years. The province's population has grown by more than one million residents in the last two decades. More schools and hospitals are needed as well as assisted living facilities for a growing elderly population.

While numerous companies in the private sector, facing financial hardships, have worked with their employees to take a rollback in wages rather than face job loss, the province's employee unions have yet to be approached officially to discuss wage concessions. Considerable savings to provincial spending could be realized by coming to agreements with the province's 21,000 employees.

The provincial leadership has been rather reticent about necessary cost-cutting measures. Experts feel that residents may not take kindly to having surprises revealed at the last minute. Recovery may take several years but few feel that it will happen without specific government intervention.

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Tuesday, September 15, 2009

Evaluating Canada's Inflation: More Buying Power for Small Business

Volumes have been written in the last few months about Canada's inflation rate, currently sitting at 0.25% annually, and the interest rates set by the Bank of Canada. As the 2009 recession is seemingly coming to an end, according to many government and private analysts, speculation exists as to how the interest and inflation rates will be affected.

According to the chief economist for the CIBC, Avery Shenfeld, there should not be any expected growth above non-inflationary potential until sometime in 2011. The economic slack created by the recession is quite large and is expected to persist for a couple of years. Although the Bank of Canada is rather optimistic in its projections, Shenfeld feels that inflation will still feel the downward pressure of a sizable output gap well into next year.

Shenfeld explained that the core inflation rate did not decelerate this year as much as the Bank of Canada predicted. The reason for this deceleration slowdown is due, in part, to a process that economists call the income effect. Essentially, the Bank of Canada has excluded most of the volatile items that have been deflating from the Consumer Price Index (CPI).

Putting aside economic evaluation, the real question is what this means for the average consumer. In real terms, a negative year-on-year inflation rate means an increase in buying power of the average wage. With lower gas prices at the pump, and new, lower mortgage bills, average Canadians will have more money in their pockets when they go shopping. Also important is the strength of the Canadian dollar. The strong dollar is having a dampening impact on retail prices of imported goods.

Mr. Shenfeld's report does not see the projected US recovery as having much benefit for Canada. The US stimulus programs, while spurring economic growth in that nation, contain trade barriers with Canadian manufacturers that historically have benefited from trade with the US. Thus, US recovery may actually dampen some of Canada's economic advancement.

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Monday, September 14, 2009

The Price of Ending the Recession

Government officials and economic analysts are in common agreement that Canada is headed out of the recession. While there are disagreements as to the exact timeframe, there is a fact that is common to all parties – the price tag.

For a country that proudly presented a balanced budget for twelve consecutive years, Canada had to revise its budget projections for the thirteenth year and for several years to come. Canadian Finance Minister Jim Flaherty recently announced his department's projection of a $50.2 billion deficit for the current fiscal year. He was quick to add, though, that this figure is "consistent" with meeting the deficit target. The government projects that it will present deficit budgets for the next four years, adding nearly $100 billion to the national debt. The current deficit is due primarily to several factors: falling tax revenues, both personal and corporate; a massive 47% increase in unemployment insurance premium payouts; and huge bailouts to the auto industry as well as other business subsidies.

While Mr. Flaherty is holding to his optimistic prediction of returning to a balanced budget in 2013-14, Prime Minister Stephen Harper, and several leading economists are somewhat more realistic in their forecasts. However, both the Prime Minister and the Finance Minister are in agreement that tax increases and major spending cuts are not being considered in order to expedite a balanced budget.

Some analysts have suggested that drastic changes to the budget are not advisable. Rather, once the stimulus programs spending has been depleted, the government should adopt a program to control spending growth. This will enable the government to eliminate the deficit over a period of several years.

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Sunday, September 13, 2009

Leaving Your Purchases at the Checkout

Let's be honest; most of us have done it. Embarrassing as it might be, most people have removed an item from their shopping cart while waiting in line at the checkout. It used to be merely changing your mind, or realizing you took the wrong item off the shelf. Today, it is a totally different phenomenon. In today's rocky recession climate, people are tightening their belts. Some are doing it out of necessity while others are adopting a more cautious attitude. Whatever the reason, more people these days are careful of what they purchase. They come to the store with a list of needs, not wants, accompanied by a specific budget. If the tally should move above their available funds, something comes out of the cart.

As yet, there are no hard statistics for this latest trend. However, more and more stores are reporting a growing number of un-purchased items at the cash register, either removed by shoppers as they wait in line or removed by the cashier at the shopper's request upon seeing their balance.

Shoppers have also begun arranging their purchases. Health care and other basic necessities are the first to go through. If there is enough money in the wallet, the frivolous items go through last.

It's not just a question of cash. Credit card purchases have also been affected. Credit card companies used to allow customers to exceed their credit limits by up to 10 percent. No longer! Purchases that exceed the credit limit even slightly are being denied. Consumers wishing to avoid that embarrassment simply remove some items to keep their balance lower.

Internet shopping has become victim to the same trend. Research estimates indicate that as much as 59 percent of online purchases are being dumped before checkout. Much of this is attributed to the costs that are tacked on as one proceeds through various steps, including taxes, handling fees, and shipping charges. Some internet companies are reducing the number of steps in a purchase, as well as posting the costs up front, in order to retain customers.

Hopefully, the days of changing one's mind will soon return.

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Thursday, September 10, 2009

Strengthening Your Business Using Advisory Boards

A small business or start-up that is approaching a major change – expanding into a new market; launching a new product line; breaking into a foreign market – may decide that it needs help or coaching before taking on this business challenge. For many such companies, the best tool is the establishment of an advisory board. While there are no set rules about setting up such a body, it generally is comprised of seasoned, experienced professionals from outside the business. A well-balanced, effective board can become an indispensable tool to help strengthen a business professionally and help it advance its goals.

As the purpose of the board is to be advisory, not operational, its members should be appropriate to the task at hand. If your goal is expansion of the business, the board members should be able to provide you with business leads and contacts. A business seeking to strengthen its executive team should recruit board members who can serve as mentors to the top staff and provide business skills. When financial contacts are your need, recruit business people from the financial world.

Of course, only you can evaluate the effectiveness of an advisory board. You must establish clear objectives and delineate the benchmarks that the board should reach. Also, be prepared to compensate board members fairly. These are professional people whose time has value to it. It is well advised that you seek the majority of your advisors from within your own personal contacts. After all, this is your company and complete strangers may be professionally appropriate but can you work with them?

Finally, don't get carried away with establishing a board with many members. Keep the number manageable so that the board will become a workable group. Quality, not quantity, is what counts.

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Wednesday, September 9, 2009

To Buy the Competitor or Not to Buy

Although the state of the economy is still uncertain, this should not affect whether a company should pursue acquisition of a competitor, if that is its intent. Rather, one should be somewhat more prudent and disciplined in how one evaluates the potential purchase.

During these recent difficult times, the markets have naturally focused their attention on companies in distress. This should not translate into a belief that the entire business sector is in ruins. However, as the competition may be in dire straits due to the present financial crisis should not be a reason to abandon ideas of purchasing that company. Careful assessment of the competitor is crucial. Seek to understand why that company is losing money. Will your investment merely save a struggling enterprise that was on its way to closure anyway or are there other factors at play that will make this a worthwhile purchase?

It is important to dissect the company and understand how it works. Were there management problems? Did the company mismanage its relationships with its customers and suppliers? Were the employees mistreated and, therefore, did they not perform well? Is the machinery sub-standard, thus affecting the product? Examining the company with a fine-toothed comb will allow you to make an effective decision as to whether this company can merge with yours. Similarly, it is important to do a proper evaluation of your own company. Are you in a position to absorb this company? Do you have the management capabilities for this merge? Will your staff cope with the additional production and sales? Will you need capital to overhaul machinery? Similarly, examine your goals. Perhaps you are only interested in expanding your customer base. In that case, go directly to the competitor's customers, rather than affecting a buyout.

Research is your best business ally.

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Tuesday, September 8, 2009

Cyber-Shopping Anyone?

In a country that is so highly attached to Internet access and the latest high-tech gadgetry, Canadians are slow to adopt the trend of cyber-shopping – shopping online. Online sales have certainly been growing at a steady pace - a 61% rise in three years – but they still lag behind online sales in the United States.

Analysts attribute Canadian reluctance to become cyber-shoppers to several factors. High shipping costs in Canada have caused a large number of shoppers to abandon their online purchase before completing the transaction. Additionally, when it comes to security, Canadians are far more sensitive than most other nations around the world. Simply put, many Canadians have an abiding fear of credit card fraud and are skeptical about revealing their credit card details online.

On the other hand, the rise of specialty brands online is winning over Canadian reluctance. The allure of securing hard-to-get brands or one-of-a-kind items has been a boon for many online retailers.

Some of the nation's larger retail outlets use their websites primarily for marketing and rely upon their sites to attract buyers to their stores. This has allowed a market to open up for smaller retailers whose "primary store" is located on the Internet.

Consumers still expect top service wherever they buy. For online stores, this translates into speedy and affordable delivery as well as reliable customer service. Moreover, online stores must market their sites in a variety of ways if they are to be noticed.

The variables of the economy affect the online stores as much as traditional shopping outlets. When consumers are in a spending mood, they are more likely to shop for items online that may be frivolous or unnecessary. However, when belt tightening begins, online retailers have to rapidly shift their focus to marketing items that are more affordable.

With annual sales in excess of $15 billion, and growing, cyber-sales seem to have carved out a niche with the Canadian consumer.

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Monday, September 7, 2009

Visa to the U.S.

Gone are the days when a Canadian family would hop in the car and drive down for a day to the closest city in the U.S. to do a little shopping. But the desire to purchase certain goods in the U.S. still exists. Now, in the world of eCommerce, a British company has made shopping in the U.S. available to Canadians while staying at home.

Borderlinx, headquartered in the U.K. with additional offices in Brussels, was established by experts in eCommerce, logistics management and international trade. The company enables U.S. retailers to sell their products to a global marketplace by providing innovative eCommerce management solutions. Similarly, consumers globally are provided access to the best quality products at the best possible prices.

Canadian Visa credit card holders are now able to purchase goods online from American retailers with relative ease. Through Borderlinx, Canadian shoppers are provided with a U.S. address and shipping services. This makes previously hard to access stores as simple as shopping from the store around the corner. Studies conducted by Visa revealed that 37% of Canadian online shoppers prefer shopping from U.S. stores due to the variety of products available. The Borderlinx service simplifies the shopping procedures and provides an on-screen calculator that allows shoppers to know exactly what will be the final price of their purchase. Additionally, shoppers through this service have the option of consolidating their purchases from several U.S. stores into one shipment, thus reducing shipping prices.

Canada is the first country to utilize this shopping agreement with Visa although other countries are expected to join later this year.

In the current economic climate, when consumers are careful how they spend their money, this new service affords shoppers an excellent way to make informed shopping decisions.

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Sunday, September 6, 2009

Introducing CanNor, Canadian Northern Development Agency

Following promises made in last fall's election campaign and, more recently, in last November's throne speech, Canadian Prime Minister Stephen Harper revealed that the headquarters for the new Canadian Northern Development Agency (CanNor) will be built in Iqaluit, capital of Nunavut.

The Prime Minister's announcement was made during a recent tour of the North, his third tour of the region this summer. CanNor will deliver funding for economic development, advocacy, and research. The newly established agency will receive $50 million in federal funds over the next five years.

The decision to locate the new agency's headquarters in Iqaluit has been met opposition from several senior government officials, stating difficulties finding enough housing and staff. Mr. Harper responded that challenges such as these are exactly the reason for establishing an economic development agency and, therefore, the government must place the agency directly where the challenges are the greatest.

CanNor will also have satellite offices located in Whitehorse and Yellowknife, as the agency is designed to work cooperatively with all the Northern territories. The new agency will take over some existing federal programs and will develop new programs adapted to the territories' realities.

As several other nations have their sights on the resource-rich northern territories, the Harper government is determined to concretize Canadian sovereignty over the region. Establishment of this stand-alone regional economic development agency will allow the Federal government to work with the region to help it reach its full potential, both human and economic.

The Premiers of both the Yukon and Northwest territories welcomed Mr. Harper's announcement but added that additional key economic developments are crucial to their respective territories in order to strengthen the entire Arctic region.
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Thursday, September 3, 2009

Promoting Your Business on Social Networks

"The times they are a changin". Bob Dylan wrote these words nearly 45 years ago. He must have been predicting the future.
It used to be quite common that people assembled at social events and exchanged ideas, recipes, political viewpoints, and suggestions on where to shop for the best value. The 21st century has not replaced the traditional social gathering. However, it has augmented that with the modern and very powerful equivalent – the social media network.

Marketing studies have shown that recommendations from friends and family have the greatest influence on what people purchase. As millions have become attached to various social networking sites that connect people with similar interests worldwide, the circle of influence grows much larger.

While most social media sites are not designed as shopping venues, marketing specialists know that exposure on these sites can be extremely valuable. A prime example is Facebook. Facebook has more than 200 million subscribers worldwide. Members enter their profile on the site. Generally, this includes your demographics, preferences and, often, your occupation. Marketing pros at a company will post an attractive profile for their product or service. As soon as a Facebook member visits that company's profile, they are identified as a potential customer. Most Facebook members openly display their friends' networks. This enables the same company to view this circle of friends also as potential customers. Moreover, as the company can obtain a substantial amount of personal information about its online customers, this information can be extremely helpful in future marketing strategies and product development.
Businesses have discovered that social networks afford exposure to their companies that otherwise might not occur. However, it is wise to keep in mind that these are social networks and acceptance of a commercial presence will require imaginative marketing, rather than mere technical placement of corporate material.
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Wednesday, September 2, 2009

Breaking the Arctic Ice

Canadian Prime Minister Stephen Harper has been investing time, money, and energy to assert Canadian sovereignty over Arctic territories that are sparsely populated yet richly endowed in natural resources.

The Prime Minister recently visited the community of Iqaluit, the capital of Nunavut. Nunavut's population is thinly spread over a territory equal in size to both Alaska and Texas combined. Poverty and suicide are quite rampant in these northern communities, as are serious problems of substance abuse. Unfortunately, there are limited resources available for treatment centres. This issue was one of several discussed with the Prime Minister on his visit.

Canada is not the only nation looking towards these northern regions. The area is rich in natural resources, including huge oil deposits. The U.S. Geological Service estimates that the Arctic regions contain enough oil to supply global demand for three years. Global warming has contributed to an erosion of sea ice thus making passage to the Arctic via the Northwest Passage easier. Canada claims that the Northwest Passage is sovereign Canadian territory while the U.S. claims that it is an international waterway. Joining the U.S. claim are other countries with eyes trained on the Arctic and its treasure trove of natural resources. Russia and Denmark have been heard to lay sovereignty claims to areas in the Arctic in recent years.

Prime Minister Harper's move to enhance the communities of the Arctic is intended to spur economic and social growth, thus creating a contiguous territory. His government intends to relinquish much regional economic planning to local regional councils. Nunavut Premier Eva Aariak has called on Ottawa to give the Arctic region more control over its offshore energy resources as well as its derived benefits.

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Tuesday, September 1, 2009

Is a Second Round of the Recession on the Horizon?

Speculation has been growing in some economic circles that a "double-dip" recession – a second wave – is a distinct possibility. Some investors and economists fear that the government stimulus programs in various countries have managed to stabilize economies but have failed to jump start any long term growth.

Countries like Japan, Germany, and France have recently posted positive growth figures for the second quarter. However, world stock markets have remained fairly volatile.

The growing fear is that growth generated by the trillion of government stimulus dollars is only temporary and will cease as soon as the governments cease funding the various programs, most probably within the coming year. Thus, the term "double-dip" has come into use.

In order to truly declare an end to the recession, countries should be experiencing substantial sustained growth in consecutive quarters. This has failed to materialize yet in any significant fashion. Certainly, there is reason to be optimistic but consumers have yet to display a return to a strong buying mentality. Many are still in a savings mode, particularly in the United States. Even though interest rates are at an historic low in the U.S., many consumers fear taking on any more debt. Canadians are faring better than their neighbours in the U.S., but they, too, are still leery about the economy, as unemployment is still rampant in the nation, especially in the manufacturing sectors.

Economists hope that governments will not make the mistake of ending the stimulus packages too early. A good beginning can lead to a stable financial future if the elements of recovery are managed properly and timely.

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