Corpcentre's Blog

January 17, 2010

$170 Billion Charged to Visa and MasterCard

Once upon a time, there was the Chargex card. Some received it from their bank but most Canadians lived without it. Today, more than 40 years after Canada’s first charge card, there are more than 74 million credit cards in circulation, roughly 3.1 cards for every Canadian over age 18. The last available statistics indicate that Canadians charge more than $170 billion to Visa and MasterCard.

Studies show that the average person spends 112 percent more on a credit card as opposed to cash payments. In real terms, this means that Canadians are living well beyond their means. Many are juggling several credit cards and paying minimum monthly payments as low as 2 per cent of the balance, rather than paying the entire balance. In fact, more than 50 per cent of credit card holders opt for not paying the balance. Putting this into perspective, if your balance was $5,000 at 18 per cent interest, and you opt to pay only the minimum monthly, it would take almost 30 years to pay the balance, assuming you did not add to it.

Part of the problem is that credit cards are a basic necessity of today’s society. Some cards also provide benefits that can be quite worthwhile. The trick is to be in control.

There is no reason to carry a different credit card for each store and each bank. One all-purpose card should suffice for virtually every need. (It is wise, though, to have separate cards for personal and business expenses). Check the interest rates as they vary greatly from card to card. Avoid temptation! Use the card for what you need, not what you want! Using a credit card as opposed to not carrying cash makes sense. Using it instead of cash that you don’t have can lead to problems.

If credit card debt starts taking over your existence, don’t be afraid to seek help from a credit counselor before it’s too late.


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December 30, 2009

A Stronger Financial System

Ever wonder what happens behind the scenes of banks? For example, how does the bank manage its money?

Part of the system involves banks lending money to one another for short terms. The system is known as repurchase agreements, or repos for short. In order to raise money, a bank sells bonds or other collateral to another bank but agrees to buy back the collateral at a later date. Repos are part of a market that involves traders at the various banks trading with each other and shuffling the collateral back and forth.

All was well and good until the recent recession. The banks began to be leery of the solidity of other banks. The time proven system of trading began to fail, leaving even the healthiest of banks with a potential cash shortage.

Anticipating a possible major blow to the Canadian banking system, the Bank of Canada, together with the country’s securities industries, began creating a plan to revamp the system and ensure crucial funding for the country’s banks.

The plan involves establishing a central clearinghouse. Banks would no longer trade with each other but, rather, with the clearinghouse. This would eliminate questions of stability of other banks. Also, a central clearinghouse would be able to give a bank a clearer picture of their repos transactions, thus affording the bank a better way to manage its capital.

The Bank of Canada hopes that this new system will begin to be implemented by mid-2010 and will increase the overall safety and solidity of the Canadian banking system.

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December 15, 2009

Harmony in B.C.? The implementation of the Harmonized Sales Tax (HST)

July 1, 2010 is rapidly approaching in British Columbia. While it will be a national holiday as it is every year, it is also the date that the province will implement the Harmonized Sales Tax (HST). The jury is still out on whether it will be good for the province or not.
 
The answer, at this point, depends solely on who is asked. There are clearly going to be winners and losers in this new tax. The decision to implement the new tax is final. The actual impact is still theoretical.
 
It seems that the majority of the B.C. business community is clearly in favour of the HST. With 130 jurisdictions around the world using an HST style tax, B.C. simply cannot ignore joining the fray, if it wishes to compete for business investment. The province must offer the same tax advantages to the business community, lest businesses move elsewhere to obtain the benefits. Similarly, with e-commerce on the rise, retailers and manufacturers are competing with provinces like Ontario, which voted to adopt the HST.
 
A major challenge lies with the hospitality industry and other business sectors that currently don’t have to charge PST, or services that don’t have to charge GST. Under the new HST, these businesses and services will have no way getting back the HST. In essence, here will be the new tax burden with no relief in sight. Also, the average consumer will pay more taxes. Consumers cannot claim any portion of the HST but will pay more for products and services that are currently tax exempt but will not be so under the new HST.
 
Economists claim that implementing the HST is the right move for B.C. Come July 2010, B.C. will see if the economists are correct.
 
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December 3, 2009

Focus On One Thing

It sounds like instructions that you might give to a photography student or a line that you might hear during an optometrist’s visit. But, it is also the credo of many business entrepreneurs. The secret of success of great companies is to do one thing very well. It is far too easy to go off on several tangents and try to “be number one” in a few ways. But, the business leaders who have made their way to the top will tell the same story. Concentrate your energies on one area and focus your attention in that one direction.
 
For example, sales are crucial to business. But, are great salespeople born or made? Some do have an inherent talent to sell. However, some companies have put their energies into strong sales training. This is a proven investment as salespeople no longer shoot from the hip. Rather, they become part of the sales force that drives the company forward. You focus on building the sales team, complete with team spirit.
 
Apropos team spirit, that may be the area requiring your attention. Employee retention is crucial in the business world. A constant turnover of staff will definitely have a negative impact. A key strategy employed by many experienced employers is to find ways to create an environment that makes employees desire to come to work. The answer is not always money. Making employees an active part of the company is valued highly. Employees’ opinions do count. Chances are very good that your staff has terrific ideas about improving the company and its sales. Provide incentives but allow employees to be part of that incentive process. The sense of belonging creates the driving spirit so that everyone is part of the big picture.
 
Think of business success like an arrow. It propels forward only when the point is out front.

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November 17, 2009

Managing Your Corporate Knowledge

Thanks to your hard work and dedication, your business has grown. Once a small workforce that met for coffee and donuts every morning, the company has now grown into a major concern with scores of employees in several locations. As the boss, you knew each employee and probably taught them what to do. In a pinch, you could fill in for them as well. Today, though, the employees are names on an HR roster. The bigger issue, though, is that you have lost touch with what each employee knows. As the person at the top, it is vital for you to know how much human knowledge and skills are at your disposal.
 
A proper Knowledge Management (KM) system is a vital tool. It helps uncover the knowledge in your organization and reduce or eliminate gaps caused by employee turnover. Furthermore, it helps businesses avoid duplication of work.
 
A recent study of companies with a KM program revealed some startling figures. 63% of the companies had realized an acceleration of innovation. Two thirds of the companies had reduced operating costs. A similar percentage experienced a dramatic increase in teamwork and cooperation as well as an increase in responsiveness and performance speed. The study also calculated that failure to exploit knowledge in an organization effectively results in 6% of a company’s annual revenue remaining unrealized.
 
Experts in KM recommend implementing an intranet-based information system in order to make information readily available and accessible within your company. Similarly, exit interviews for departing employees should be carefully conducted so that specific knowledge does not go out the door with the employee.
 
Finally, even though your business has grown, make the time to socialize informally with employees. In order to work as a team, you must know the team members.
 
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November 6, 2009

Happiness is the Key to a Successful Business

More than 40 years ago, a classic episode of The Flintstones featured a segment that was ahead of its time. Fred’s wife, Wilma, stars on a television program and sings the Rockenspiel jingle. Those who remember this episode will recall that the song instructs wives to make their hubby happy.
 
     Even the creators of those stone-age characters realized that happiness is crucial to business growth. Entrepreneurs across the business spectrum share common goals in their desire to secure their profitable share of the market. That which divides business leaders in their quest is the method of how to constantly reach those goals. Believe it or not, some of the greatest business success stories have discovered that happiness is the key factor to continued growth.
 
     Of course, one might argue that happiness is an intangible factor that cannot be measured.  The truth, though, is that happiness can be measured. More than 30 years ago, a consultant named Fred Reichheld created a measuring system called the Net Promoter Score (NPS). The method is quite simple. After completing a sale or service, the customer is asked to rate the likelihood of their recommending the company to a friend or colleague. Low scores (detractors) are subtracted from the high scores (promoters) and passives (mid-range scores) are left out of the equation. The result is the Net Promoter Score.
 
     According to Mr. Reichheld’s studies, world class companies scored an NPS of 20 – 50. Some score much higher. The more aggressive companies measure their NPS daily and analyze results to look for patterns of what makes their customers happy. By repeating those patterns, they can keep customer happiness high and continue their success. Conversely, they can also track the issues that bother customers and try to eliminate those unhappiness factors.
 
     Remember, a happy customer is a loyal customer, and a loyal customer is repeat business and recommendations.
 
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November 3, 2009

Small Business Leadership Skills: Keep Focused

There is a condition that is common to many entrepreneurs. Many suffer from it in varying degrees. The condition is commonly known as Multiple Idea Syndrome (MIS).
 
     MIS manifests itself by creating a temporary inability to effectively focus on one’s business ventures due to an abundance of new business ideas that crop up daily in the mind of the entrepreneur. The result may be impaired management techniques, lack of leadership, and reduced attention to business development.
 
     Such is the mind of the entrepreneur. One good idea leads to another and opportunity is always just around the corner, waiting to be found. However, danger also lurks around the corner. New ideas are wonderful.  But, a business has to be continually nurtured and properly cared for. If you are the spearhead behind a business, it’s up to you to provide the leadership and spirit to keep it moving.  There is a time and a place for everything. Pitching continual new ideas may not be the best management technique for your business.
 
     You have a vision of where you would like your business to go. Keep to it! Don’t allow yourself to veer from the path you planned by constantly trying new ventures at the expense of the ongoing one. You are the backbone of your business and must provide the leadership for others. Inspire through hands-on management. If you are perceived as being “all over the place'” your business will suffer. Set a course of action and lead your team to follow that course.
 
     And what of new ideas? Abandon them? Of course not. Just be sure that you don’t lose focus of plan one before you set plan two into motion.
 
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November 2, 2009

Some Interesting Facts About Canadian Small Business

They may be called “small” but small business is a major player in the Canadian economy.

Take, for example, job creation. Over a ten year period, beginning in 1997, over 37 percent of all new private sector jobs were created by small businesses. In fact, almost half the Canadian private sector workforce – 48 percent – is employed by small businesses. If we dig a little further, over two thirds of the employment of five major industries are in small business: non-institutional health care, construction, accommodation and food, forestry, and general services.

Although economic figures vary from source to source, it is estimated that small business in Canada generates from one third to half the Gross Domestic Product (GDP) of the country. From a human standpoint, small business accounts for more than 5.5 million jobs from coast to coast. Taking a closer look at the human aspect of the figures, 95 percent of all Canadian service-producing enterprises are considered to be small businesses.

It seems that many Canadians prefer to keep their businesses small. Statistics Canada reports that 75 percent of all businesses employ fewer than 5 employees. Furthermore, the Canadian desire to keep their businesses relatively small far exceeds their American counterparts. Canadian business owners continue to work at more advanced ages in order to maintain operating the business that they built. More than a quarter of self-employed Canadians are over the age of 55. According to studies, older Canadians enjoy the freedom of lifestyle that comes with being self-employed and prefer to work longer in years in order to maintain that freedom.
 
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October 28, 2009

Starting a Small Business Survey: 12% to Establish Internet Enterprises

Starting and owning a small business appears to be the aspiration of many Canadians, according to the findings of a poll conducted for the Royal Bank of Canada (RBC).

Over the next several years, some 3.3 million Canadians intend to start their own business. Moreover, the survey found that there appears to be a change in preferred industry focus of would-be entrepreneurs. The desire to open a retail business dropped by 2 per cent from previous surveys; personal services and arts also dropped by 2 percent; and business services/consultancies dropped by 3 percent. The top industries of choice appear to be Internet related businesses. Nearly 12 percent of those interviewed plan to establish an online enterprise.

The RBC survey also rated advice by veteran entrepreneurs for newcomers to the business world. The top piece of advice was to do thorough research before setting up shop. Know exactly what you’re getting into. Learn about your competition and be realistic about what share of the market you can capture.

Other pieces of popular advice of what to do before opening a new business included preparing a detailed business plan, networking with others in the field, allocating time and resources for marketing, surveying potential customers, and selecting the best site for the new enterprise.

The survey revealed that 61 percent of Canadian business owners are satisfied with the way they opened their business and would not change a thing, if they had to start over. More than 60 percent felt that, looking back, they probably should have started at a younger age. 58 percent of those surveyed felt that it would have been beneficial to get more financial advice at the onset.
 
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October 26, 2009

E-commerce Provincial Sales Taxes

E-commerce has greatly increased many retail sales. Businesses, large and small, can now reach customers from coast to coast with relative ease, if they have a presence on the internet. However, a very interesting – and tricky – question arises from all these sales. Does a website vendor in one province selling taxable goods and/or services to customers in other provinces have to charge and remit other provinces’ sales taxes?

Would that the answer were simple and straightforward. Just as taxes differ from province to province, so do the requirements for inter-provincial commerce.

Keep in mind that when dealing with tax related issues, it is better to err on the side of caution. Therefore, you should consult with your accountant and/or tax advisor to verify your own personal situation. Similarly, you can obtain detailed information from the finance/revenue ministries of the specific provinces in which you are conducting online business.

There are a number of factors that will determine your tax collection situation. As many small business owners are aware, you are exempt from charging and remitting the GST if you are a small supplier. However, even a business with small supplier status may have to register for GST if they conduct business in provinces that currently have HST (Harmonized Sales Taxes). The GST is part of the HST. Therefore, de facto, you will have to charge and remit provincial taxes in those provinces.

Some provinces have passed legislation requiring out-of-province vendors to register for their provincial taxes. Other provinces “suggest” registering.

Were you aware of the fact that if you, as a vendor, do not collect RST (retail sales tax) in a specific province, the responsibility falls onto the purchaser?

The tax issues are complicated and the requirements, and loopholes, are plenty. Before pursuing your sales in other provinces, check the tax requirements carefully with a qualified tax professional.
 
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