Corpcentre's Blog

August 31, 2009

Is Deflation Good for Business?

Filed under: Bank of Canada,canadian business,deflation,world economy — corpcentre @ 7:11 pm

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.

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August 30, 2009

How to Reduce Your Business Costs

Filed under: canada economy,canadian business,economic recovery,recession — corpcentre @ 7:01 pm

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.

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August 27, 2009

Negative Reviews about your Business are Positive

Filed under: customer service,entrepreneurs,recession,small busines — corpcentre @ 11:22 pm

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.

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Innovation and Technology are Top Priorities

Filed under: canada economy,canadian business,economic recovery — corpcentre @ 12:07 am

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.

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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.

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August 24, 2009

U.S. Economic Stimulus Plan Harms Canadian Business

Filed under: Buy America,canada economy,recession,US economy — corpcentre @ 2:46 pm

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.

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August 23, 2009

It’s All in the Cards

Filed under: business cards,canada economy,canadian business — corpcentre @ 9:03 pm

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.

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August 20, 2009

An Economy Divided

Filed under: Economic forecast,economic recovery,entrepreneurs,recession — corpcentre @ 8:58 pm

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.

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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.

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August 18, 2009

Alternative Financing For Your Business

Filed under: asset-based loan,canada economy,contract financing,small busines — corpcentre @ 8:22 pm

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.

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