Corpcentre's Blog

January 4, 2010

Paying Down Debt vs. Savings

Filed under: bankruptcy,debt,economic recovery,recession — corpcentre @ 5:28 pm

The great Canadian conundrum – live for today or tomorrow? In an era when money is tight and many families have to make tough financial decisions, the question of priorities arises. How much should one save for the future? How should one juggle his current needs with future needs?

Certainly, young couples face this dilemma. By trying to squirrel away retirement money and manage a young household, many couples begin to choke. Experts advise that the best strategy is to erase debts before saving money. Start by paying down credit card bills. The result is a guaranteed after-tax return of 18%. No RRSP will offer that rate of return! Try, as well, to whittle down the mortgage. Once these debts are out of the way, you can re-direct the money into your RRSP.

In addition to the debt-first strategy, the next step, once you’re ready to invest, is to prepare yourself for the inevitable. Since you can’t predict the future, try to be in control of your options as best as possible.

Plan your investments with some foresight. Rather than look for the best deal today, try and decide what your future needs will be and work backwards. Invest in ways that will best fit your needs. Try to find the best mix of stocks and bonds for you and stick to that mix. Markets shift but your long term consistency should work to your benefit. Also, try and limit your risk. Some is necessary but everything in moderation. Consider a 60-40 mix of stocks and bonds. Once a year, take some money from the more profitable side and bolster the lagging side. This way, you will always buy low and sell high.

Remember the sage advice – be in control of your money; don’t let your money control you!

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December 29, 2009

Canadian Consumers May Rock Economic Recovery

Filed under: Bank of Canada,bankruptcy,economic recovery,mortgage — corpcentre @ 6:15 pm

Recent statements by Bank of Canada governor, Mark Carney, reflect a spirit of optimism but also carry an undertone of warning.

Despite the recession, Canadians have amassed greater debt, due, in part, to the low interest rates currently dominating the market. These rates, currently at an historic low of 0.25%, were set by the Bank of Canada as emergency interest rates in order to resuscitate an ailing economy. The rates will rise eventually and Mr. Carney, as well as other leading economists, fear that many Canadians may be caught short. Mortgage rates have been extremely low for months while housing prices have rebounded. This has created a perfect setting for many Canadians to take on large debts. However, as the economy improves, interest rates may rise, at a quicker rate than they dropped. Mr. Carney is cautioning Canadians that purchasing a more affordable home today may be a wise choice.

One of the early warning signs of Canadians over-extending is the rise in personal bankruptcies. The third quarter of this year showed a 41 per cent jump compared to the same period in 2008. Similarly, the delinquency rate of mortgage payments has risen by 50 per cent in the last year.

The governor emphasized the vulnerability of the country’s economy due to household defaults. As consumers are the key drivers to the nation’s economic recovery, Mr. Carney, therefore, hazards Canadians about avoiding credit risks. Of course, a similar warning has been issued to lending institutions to properly monitor household credit.

Mr. Carney strongly believes the Canadian economy is definitely on the rebound and he expects Canada to outperform the other G7 countries. However, Canadian households will play a vital role in that economic recovery and the governor hopes that Canadians will act with economic responsibility for the collective good of the nation.
 
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December 4, 2009

How to Avoid Being Defrauded

As if the recession hasn’t presented us with enough business and financial worries, a new item has been added to the worry menu.
 
According to the 2009 PricewaterhouseCoopers’ Economic Crime Survey, some 56 percent of companies surveyed have reported falling victim to white collar crime in the last year’s survey period. This number reflects a 4 point increase over the last two years. Indeed, the figures are the highest in the last six years. There has been a 10 point increase since 2003.
 
It would appear that difficult economic times increase the incentive to commit fraud as a source of income. The end result is due, in part, to a greater vulnerability of many companies whose control systems have been weakened or even eliminated due to downsizing and cost-cutting. Fewer funds are being allocated for fraud detection, prevention systems and investigation. As a result, financial fraud is increasing both from within and outside organizations.
 
Certain sectors have suffered from fraud the worst in the last year including communication, financial services, insurance, hospitality and leisure. Asset misappropriation and accounting fraud were the most common types of fraud encountered by the companies surveyed.
 
As an end to the recession is not yet in sight according to many experts, it is felt that fraud may continue to increase. Certainly, as many companies are yet to take preventive measures, there are adequate opportunities for the talented white collar criminal.
 
Canadian judges have responded to this increase in fraud crime by handing down severe and harsh punishments for those found guilty. But, the number of crimes reported far exceeds those caught. Businesses would be well advised to keep their eyes open and their systems well protected.

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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 25, 2009

Keeping Your Client Base: How Important is One Customer?

  If it came to a debate, the truth is that both opinions would be on the same side. Those who have succeeded in their business ventures will tell you what newcomers to the business world don’t always know – it is far more important to hold on to strong customers rather than just finding new ones.
 
Of course, logic might deem otherwise. Shouldn’t I always be on the lookout for new customers? Shouldn’t I try to inflate my customer base, making it as large as possible? Let there be no misunderstanding. Customers are very important to a business. After all, no business, no income. But, let’s be honest. Is there any guarantee that the new customer that you found yesterday will still be there tomorrow? On the other hand, even in times that are less than the best, the chances are quite good that a long-standing, loyal customer will still be there.
 
Client retention is vital to the longevity of a business. It is not enough to lure customers through pricing that beats the competition. After all, tomorrow the competition may lower his prices and your customer will follow the price trends.
 
Studies have shown that retaining customers will positively impact the bottom line of a business up to 15 times more than landing new customers. That’s money in your pocket at a much lower risk.
 
Providing great service is not enough to guarantee customer loyalty. It is imperative to develop an actual relationship. Make the relationship deep enough so that the client will not be tempted to take his business elsewhere. When you develop a level of trust with your client that, ultimately, helps him as well as you, you will manage to build a relationship that will remain strong, even when times are tough.

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October 21, 2009

Telephone Etiquette for Small Business 101

It may sound like a trivial subject, but that is far from the truth. Even in this computer age, the telephone is your front line. More often than not, a business is judged by how one is received over the telephone. Give the wrong impression and the transaction is over.

Try and be prompt. Don’t let the telephone ring off the hook. No more than a few rings if necessary.

It is important to convey enthusiasm and professionalism. A warm, clear response, coupled with moderate tones and proper language convey a highly, professional image. Accents are most acceptable but improper language is not. Try and avoid using slang and leave professional jargon out of conversations with laymen.

Avoid leaving people on hold for an extended period of time. Even though the music on hold may be quite pleasant, remember to check back every half minute or so. If the desired person is not available, or will not be free to take the call for several minutes, offer to take a message before the caller asks.

We all have bad days. However, the rule of thumb is to leave it at the door. Don’t convey your negative feelings to the caller.

Speakerphones should be avoided. The caller can hear when they are speaking to someone on a speaker. It gives the impression that you are simply too busy to lift the receiver.

If your telephone system is automated, be sure that the recorded voice sounds professional and that the information in the system is current.

Finally, be prompt about returning calls. If someone left a message, they do wish to speak to you. Good business sense dictates that a timely reply is the best course of action.
 
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October 13, 2009

Federal Government: $20 Million to Develop Eastern Ontario

Filed under: economic recovery,incorporate in Ontario,Ontario Business — corpcentre @ 8:39 pm

The Canadian government’s Economic Action Plan was designed and legislated earlier this year to provide economic stimulus and fiscal assistance to segments of the country in need as a result of the recent global recession. One such area that has received special government attention is the rural region of eastern Ontario.
Over the next two years, $20 million of stimulus funds will be provided by the Federal government for the Eastern Ontario Development Program (EODP). EODP will be administered by a new government agency, the Southern Ontario Development Agency, currently being established. EODP is designed to contribute to the successful development of business and job opportunities by supporting community-based initiatives in rural communities. These funded opportunities will hopefully attract and retain youth in the communities, support skills development, make capital available to new and existing businesses, and support technological enhancements in these communities located far from the major urban centres of the province.
The rural area of Eastern Ontario extends east from Durham Region and Algonquin Park and is bounded by the border of Quebec. Not included in this program are the cities of Kingston and Ottawa.
In order to make these funds available to a broad range of residents, EODP eligibility is open to non-profit organizations (including municipalities), Aboriginal organizations, community development associations and organizations, local entrepreneurs, and small to medium sized businesses within the administered region.
Organizations requiring detailed information on eligibility and applications should contact a local Industry Canada officer. Officer information can be obtained from the Industry Canada web site. 
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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 5, 2009

100 Million Dollar Development Program For Southern Ontario

Prime Minister Stephen Harper’s Economic Action Plan, officially released in January of this year, is the result of consultations and discussions with interest groups, business leaders, provincial and municipal governments and the Canadian public. The global recession has affected each province differently and, similarly, different communities have specific needs. As a result of the specific economic challenges faced by communities and businesses in Southern Ontario, a new federal agency was created to address those issues.

On August 13, Mr. Harper launched the new Federal Economic Development Agency for Southern Ontario (FedDev Ontario). As economic recovery begins in Canada and in nations around the world, FedDev Ontario will help workers, businesses and communities in Southern Ontario take advantage of various economic opportunities.

The new agency will use several new or existing programs to expedite the flow of funds to Southern Ontario. For example, $100 million will be available via the Southern Ontario Development Program to promote economic development and job creation. An additional $350 million from the Community Adjustment Fund (CAF) will provide short term economic stimulus to communities affected directly by the recession. The CAF will also provide $30 million to the Community Future Development Corporation which provides important services to businesses and entrepreneurs in Southern Ontario. The Business Development Bank of Canada will invest $50 million in Southern Ontario. And, finally, more than $67 million in grants will be available from the National Research Council (NRC) for technical innovation leading to wealth creation. And, the Industrial Research Assistance Program of the NRC will receive an additional $27.5 million to foster innovation among small and medium-sized businesses in Southern Ontario.

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October 2, 2009

Credit Now Available From The Federal Government

A person needs oxygen to survive. A business needs credit. Even in the most difficult of times, the flow of oxygen remains uninterrupted. Not so, however, with credit.

Many a business has seen its line of credit be reduced or cancelled over the course of the last year. Financial institutions, seeking to reduce risks on unsecured or unstable credit lines, have made obtaining funds ever more difficult. This move has dealt a crippling or death blow to many small businesses in Canada.
Under Canada’s recent Economic Action Plan, designed to stimulate and strengthen the Canadian economy, the Federal government is sponsoring a program that will work with financial institutions in the private sector. The Business Credit Availability Program (BCAP) will provide loans and other forms of credit support to creditworthy businesses. At least $5 billion has been allocated in loans and other forms of credit support for business enterprises with viable business models but, for various reasons, have limited or no accessibility to financing.

The BCAP is a joint venture between two financial Crown corporations and private Canadian financial institutions. The steering committee is comprised of senior representatives of all sponsoring parties whose experience and commitment have establishes a program with initial promising results. Similar to credit issues, discussions are also being conducted to examine ways of providing accounts receivable insurance.

Business owners and entrepreneurs seeking assistance through this program to support their established operations and preserve jobs should contact their financial institutions to discuss their needs and eligibility. Your financial representative can advise you which program is best suited for your particular situation.
 
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