Corpcentre's Blog

February 23, 2010

Hope on the Horizon for the US and Canada

The news is out – the recession is over! Or is it?

Whatever you read today seems to have a different opinion. Some say that the worst is behind us and we’re recovering very nicely, thank you. Others say that we’re experiencing a temporary lull before the next storm. Optimists say we can return to our previous standards of living. Pessimists say that we should learn from our mistakes and prepare for the next rainy day.

The truth probably lies somewhere between the two. The fact is that the best of economists will tell you that predicting the future is virtually impossible. Yet, when the figures are checked and re-checked, the recent economic indicators are rather positive. Forget the major “what-if” theories and focus on what’s really happening.

Recently released figures for the final quarter of 2009 indicate a growth in the GDP of both Canada and the U.S. In the U.S., the growth is attributed primarily to inventory rebuilding. While some consider that a temporary measure, likely to taper off, others point out that the need for increased inventory is due to resurgence in consumer spending. True, consumers are still spending their money more cautiously but the figures remain positive.

Not just consumers are spending more. Business investments grew by 2.9% in the final quarter, as compared to a nearly 6% drop in the third quarter. Equipment and software investments rose by a whopping 13.3% for the quarter. Also, net exports added to the U.S. GDP, indicating that the Americans are now using their weak currency and high productivity to their benefit in foreign trade.

Back in Canada, economists have re-examined all the figures and are pleasantly surprised that economic growth in the fourth quarter exceeded 4%, well above the forecasts. The Canadian figures continue to rise well, indicating that recovery is progressing.

It’s hard to tell but, for the time being, after a treacherous journey, both Canadians and Americans are safely on the way back home.

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February 2, 2010

Canadian Auto Industry Driving Growth

Cars are a vital part of the Canadian culture, not to mention the economy. The recent recession had a devastating impact on automobile manufacturers and sales in North America. However, with the economy on the rebound, sunnier days are in sight for the Canadian auto industry.

British Columbia and Alberta, the country’s westernmost provinces and both with resource – dependent economies, were hit extremely hard when commodity prices took a nosedive during the recession. However, with the demand for natural resources rapidly returning, the economy in the west is improving and car sales will follow suit. Industry experts predict that new car sales in British Columbia will rise by 5% in 2010 and by 10% in Alberta. This is a major recovery following a dismal 2009 ending in sales declines of 15% in B.C. and 21% in Alberta.

Growing consumer confidence in the nation’s economy, coupled with global recovery, is expected to fuel positive sales figures across the nation. Projections for the current year anticipate auto sales to climb to 1.53 million units, 10% higher than sales figures for 2009.

Another province expected to contribute to the rise in sales figures is Saskatchewan. Although the province holds the record for the oldest vehicle fleet in the country – average age exceeding 11 years – auto sales are still 12% above the average. In general, growth in the province has exceeded the national average for the last three years.

On the other end of the scale, Quebec is expected to show only a moderate increase in auto sales of no more than 3%. The province currently has more new vehicles per capita than any other province.

Whether the contributing factor is a recovering economy, a relaxation of credit restrictions, or even purchases for the upcoming Winter Olympics, the fact is that Canadians love their new cars and, having weathered the global storm, it’s time to go shopping.

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February 1, 2010

Career Path for an MBA in Canada

It’s best to begin with the good news. Overall, on the global level, the Canadian economy is in much stronger shape than the American economy. That having been stated, life is still rather difficult at a grass roots’ level, especially if you are a recent graduate of a fine university, clutching the license to a successful career – your MBA.

This is not to say that an MBA degree is unimportant. Just the contrary! It is a degree well worth pursuing, especially if your career vision is targeted in the business or financial sectors. Unfortunately, though, the current employment market is not the most promising for new MBA’s. In the finance sector, traditionally the major MBA employment sector, career centres for MBA graduates report a decline in finance jobs ranging from 6% – 16%. In addition, graduate schools have reported a drop of on-campus recruitment of at least 10%. Furthermore, graduates seeking internships have encountered a serious reduction in available placements. Back to the good news, the dip in salaries in Canada was slight, compared to the major drop in 2002. Estimates are that salaries will return to the pre-recession level by late 2010 or 2011. However, if you can’t secure a position, the salary is irrelevant.

Recruitment has been on the rise in some sectors, though. More positions requiring MBA’s have become available in government, health care, non-profit, and energy. While these sectors comprise a relatively small percentage of all available jobs, it may cause new graduates to begin thinking in different career directions, away from the traditional employment sectors. Also, a growing number of recent grads have turned to entrepreneurial endeavours, as have many Canadians who have been unable to find employment.

Some graduates have begun looking for foreign employment, although the prospects abroad are also not very encouraging. For most, though, they will weather the storm in Canada, hoping for better times down the road because, when all is said and done, there’s no place like home.

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January 12, 2010

Survey: National Salary Increases Less Than 3%

Ever the employee’s question, the issue has achieved far more relevance in the current economic climate. No longer is the annual salary increase a matter of form. In fact, many employees were relieved at year’s end to learn that they would still be employed for the coming year, let alone expect a raise from the boss.

The truth is that, owing to a negligible inflation rate, even the slightest salary increase will, in reality, contribute to a gain in living standards. Nonetheless, this is not to say that salaries in Canada will not rise this year. The question on many lips is how much?

According to surveys conducted recently across Canada, encompassing a broad spectrum of more than 700,000 employers, Canadians should not expect large increases this year. Estimates average between 2.3 to 2.8 per cent nationally. Although the national average was 2.2 per cent in 2009, caution in the business community is keeping the numbers down, at least for the foreseeable future.

Employees in Saskatchewan are projected to earn 4.1 per cent more this year, due to the province’s energy boom. Ontario and British Columbia bring down the national average, as estimates are increases of 2.6 and 2.7 per cent respectively, due to low performance in manufacturing and forestry.

In actuality, many companies across the country have projected zero salary growth for 2010. While this is not set in stone, many employers are waiting to see how the economy reacts over the next few months before making new financial commitments.

Another factor to be considered is the number of employees pulling double workloads to compensate for reduced workforces. Easing these conditions could also be considered to be a benefit.

In this recession, every little bit will help.

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November 26, 2009

Stimulus Funds in Canada to Become Permanent?

Much has been written these last few months about the effects if the recession, or whatever term one may wish to call the global economic situation since last year. Some countries have weathered the storm better than others. Certainly, Canada, while by no means having fully recovered, is on much stronger financial footing as compared to our neighbours to the south. Experts have attributed many factors to Canada’s relative strength. But, putting aside the past, the questions that still remain unanswered pertain to the future.
 
One factor that is contributing to Canadian recovery is the strength of public confidence. As the belief in the stability of the economy grows stronger, the recession and its effects recede that much more. However, what will be if the global economy takes a nosedive once again. Are we prepared for that?
 
The Canadian government has been a major player in managing the recession and orchestrating the country’s recovery. A large factor has been the availability of federal funds available through a variety of programs tailored to the various needs of the business community. While these programs were designed as a temporary stopgap to help weather the storm and keep the business sector liquid, government officials are now asking themselves whether it might be wise to make a basis of liquidity permanently available.
 
On one hand, officials see the inherent benefit of providing funds to facilitate the continuous functioning of core markets. On the other hand, researchers for the Bank of Canada are concerned that these “permanently available” funds might induce investors to take on excess risk, secure in the knowledge that there will always be a bail out plan ready.
 
While the debate continues, the government and the central bank have learned that they must maintain sufficient flexibility and readiness to respond to any future liquidity problems.

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November 19, 2009

Show Me the Startup Money

You have the idea and the knowledge. The desire, drive and ability are there. You’re ready to dive into that new business but, alas, you lack the money to start. Where does an entrepreneur secure the necessary start-up capital for a new venture?
 
By far, the easiest source of funds is from family and friends. Roughly 13% of all Canadian entrepreneurs use this route. Keep in mind, though, that family and funds don’t always mesh well. It may be a better idea to have a relative or friend co-sign or guarantee a loan, rather than lend their own money.
 
Certainly, the lender with the most available cash is the bank. Unfortunately, though, banks often pose the most obstacles to borrowers. One solution to satisfying the bank’s criteria is to apply for Small Business Financing via your bank. This federal program is backed by Industry Canada and guarantees 85% of the value of bank loans.
 
Angel capital may work for you. “Angels” are investors, generally former business executives or entrepreneurs. In addition to their money, they also can offer expertise and contacts. While they are not seeking control of your company, they do expect a healthy return and may wish to take an active role until their investment is returned.
 
It is well worth investing some time and energy to see if any government programs are applicable to your needs. Generally, these programs offer favourable terms and have flexible payment options.
 
Some 22% of Canadians have used credit cards to fund their start-ups. By checking interest rates, some have found these loans to be to their advantage.  Also, as new credit lines with lower rates become available, older loans can be repaid and interest saved.
 
Consider all your options and best of luck in your new business.


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November 1, 2009

Half the Canadian Labour Force Employed by Small Business

Thinking of opening your own small business? Many Canadians do. Nearly half the Canadian labour force is employed by small business. The question, though, is what the best business choice is. With a veritable plethora of options, choosing the right business is difficult. Also, the shaky economy gives cause for caution. Consumer spending has been reduced to must-haves. This, though, still leaves many business opportunities. Recent studies have listed some of the best business options for 2009.

Repair businesses still have a place in the economy as people prefer to fix something rather than buy new. Clothing, appliances, and automobiles are but a few of the repair businesses that continue to thrive.

Fast food is a major part of the national diet and is most likely to remain a lucrative business for years to come. Believe it or not, chocolate is also big business, despite the difficult times. Chocolate calls to people like no other confection. Find the right niche in the gourmet or specialized chocolate industry and you’re on your way.

The ever-growing demand for senior care provides tremendous opportunities. Businesses range from opening a care facility to providing home services. A related industry that is growing is medical supplies, both for personal and commercial use.

Times are tough but dirt is dirt. Businesses still need to be cleaned and the demand for quality commercial cleaning services is high.

Sports are still important, despite the recession. Sales figures show that sales of sports equipment remain strong and Canadians are willing to shell out good money for sports equipment, even if they have to work a little harder to earn it.

Dollars are scarce. Therefore, discount stores provide a strong retail option for consumers. On the other side of the coin, there are those who have defaulted on payments. Collection agencies are opening across the country to help collect debts.

Finally, perhaps motivational speaking is for you. These speakers appear daily, and are quite popular. More than anything, they offer hope to audiences and hope, these days, is in great demand.
 
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October 11, 2009

Looking for Startup Money?

Money makes the world go ’round. It also gets your startup business up and running. Many a new business venture has failed due to a lack of cash to get the operation off the ground and get through the initial difficult months until the business starts generating revenue. Unfortunately, there are no guarantees as to where you will find the necessary capital. Many entrepreneurs tend to follow a similar path in seeking funds.
 
The most popular place to look is your own pocketbook. Often, people will mortgage their homes or sell property and possessions. Certainly, there is risk involved but business involves risk and personal commitment to the venture is crucial. Of course, “personal” funds may also extend to family and close friends. Most likely, they will be far more supportive than commercial lenders and their terms are likely to be far more favourable.
 
Next in line is your neighbourhood bank. Assuming that you have a creditworthy relationship, this may be the ideal place to secure a startup loan. Also, a line of credit is most important for your business. You may not need these funds initially but they may come in handy down the line.
 
Do your research well. There are numerous loans and grants available for new small businesses from government agencies and business associations. Your local banker or your accountant may be able to help direct you to sources of funds. Similarly, professional organizations may have helpful information.
 
Investors may be the right answer for you. Although many investors prefer to become involved with established businesses, the right idea at the right time may attract investment funds to you. Your business plan should be designed with investors in mind. Be prepared to change the business plan as necessary in order to interest a potential investor.
 
Finally, don’t limit yourself to one source of funds. It may be possible for you to finance your startup form several sources. Decide what is best for your needs and don’t be afraid to seek advice from professional advisors. 
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October 6, 2009

Living Week by Week: Rough Economic Times for Canadians

The results of a new poll released this week by the Canadian Payroll Association revealed some surprising statistics and facts about the average Canadian household. A one week delay in receiving a paycheque would render nearly 60 percent of Canadians unable to pay their regular bills. Moreover, the same majority group has little or no ability to set aside money for retirement funds.

These surprising results have shed new light on the financial condition of many Canadian homes during these rough economic times. Despite common financial advice that people should have an emergency cash reserve for three months of expenses, the majority of households surveyed admitted that they are happy if they can make it to the next paycheque, let alone save for retirement or emergencies.

The younger workforce is in greater distress. 45 percent of workers aged 18 to 34 are feeling the crunch and feel that they are having trouble making ends meet. A delay in being paid would spell disaster. 72 percent of single parents responded in a similar fashion.

Regardless of age, the survey revealed that half of all Canadian workers are unable to save more than five percent of their net income for retirement. Financial planners recommend that ten percent is an advisable amount. However, the recent fluctuations in the stock markets have made saving for retirement far more challenging. Nearly one third of Canadians are trying to save more money but they can’t. 42 percent admit that they aren’t trying at all to save more.

Despite the variety and wide array of financial products being offered to Canadians by financial institutions nationwide, many Canadians seem pleased if they can pay their bills after payday.

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October 4, 2009

Joint Canada/B.C. Jobs Program

British Columbia has been seriously affected by the global recession. As a province with many communities heavily reliant on resource-based industries such as mining, agriculture and fishing and manufacturing, the job market is in a severe crisis. Responding to the needs of these western communities, the federal and provincial governments have banded together to create immediate jobs and help workers impacted by the recession.

A $14 million investment has been made recently through the Community Adjustment Fund and the Job Opportunities Program. 45 new projects will be funded, creating more than 470 jobs for laid-off resource workers. The projects are endorsed and supported by local communities. The programs are not stop-gap measures but will hopefully create foundations for long-lasting prosperity.

However, this is but one phase of a much larger program. The Job Opportunities Program was first announced in May 2008 with an initial investment of $25 million. In July 2009, the federal government and the B.C. provincial government, both committed to maintaining financial stability and keeping Canadians working during this recession, each committed an additional $30 million to the program. The Community Adjustment Fund, part of Canada’s Economic Action Plan, is a two year, $1 billion nationwide program to support job creating projects and maintain employment in rural communities. Nearly one third of the program’s funds, $306 million, are being directed to the four westernmost provinces of Canada. The impact of the recession has been felt much more in the west than other provinces across the nation.

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