October 11, 2009
October 6, 2009
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.
October 3, 2009
Looking back just a little, the current recession took hold in 2007 when the inflated U.S. real estate bubble exploded. The speed with which the downfall snowballed surprised many but did provide enough time for legislators to take early action. The Canadian government, under Prime Minister Stephen Harper, was one of the first to prepare for the coming financial challenges.
The first step was introducing legislation in 2007 for permanent tax reductions for Canadian homes and businesses. As the recession hit the U.S. in early 2008, these new tax cuts took effect, helping sustain consumer spending and pumping billions of dollars into the Canadian economy. The lower GST is a blessing for individuals who have more of their hard earned dollars to spend. Canadian businesses now benefit from the lowest corporate tax rate among G7 industrialized countries, providing cash for continued corporate growth and creating new jobs.
During the country’s strong economic years in 2005-2006, the government wisely reduced the national debt by $37 billion. By entering this recession period with a low debt burden, the government has had flexibility to run a short term deficit and provide funds for job creating investments and other economic stimulus programs.
Another preventive measure undertaken by the Harper government was regulating the mortgage market. The maximum term was reduced to 35 years and a minimum 5 percent down payment is required for government-backed mortgages.
Finally, responding to a cautious banking sector, the government has enacted programs to provide access to financing for consumers, households, and businesses. The government has not replaced private lending but, rather, is working in a cooperative effort with financial institutions to encourage lending and provide a network of guarantees.
Incorporate in Canada with CorporationCentre.ca
Click. You’re incorporated ®
October 1, 2009
Statistics are like a cat. Rub its fur one way and it purrs; rub the other way and the results are somewhat less positive.
So it is with employment figures released by Statistics Canada for the month of August 2009. Stephen Harper’s Conservative government is giving a positive spin to the 27,100 net jobs gain for the month. The announcement triggered an eight-tenth of a cent rise in the Canadian dollar, although higher crude oil prices may also have influenced the dollar’s rise. Some leading economists have announced that this is an indication of the end of the recession. All this sounds rather encouraging.
Critics, though, are quick to note that many Canadians are not feeling quite as positive. Most of the new jobs were part-time only. The number of unemployed rose in August by 21,900, bringing the total number of unemployed Canadians to 486,000 since the global financial crunch of October 2008. The decline in the manufacturing sector has continued, although construction has begun to stabilize. Most of the new part-time jobs were in the lower paying service sector. Higher paying, high productivity work fell by 17,300 positions. Full-time work continues to be in a decline.
Certainly, there is cause to be optimistic. As one economist stated, half a job is better than no job. Economic indicators seem to point in a positive direction. But, one month of net growth may be far too early to establish a positive trend. Canada may well be on its way to economic recovery. Nearly half a million unemployed Canadians certainly hope so.
September 29, 2009
September 23, 2009
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.
September 17, 2009
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.
September 10, 2009
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.
September 6, 2009
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.
Incorporate in Canada with CorporationCentre.ca
Click. You’re incorporated ®