Corpcentre's Blog

September 1, 2009

Is a Second Round of the Recession on the Horizon?

Speculation has been growing in some economic circles that a “double-dip” recession – a second wave – is a distinct possibility. Some investors and economists fear that the government stimulus programs in various countries have managed to stabilize economies but have failed to jump start any long term growth.

Countries like Japan, Germany, and France have recently posted positive growth figures for the second quarter. However, world stock markets have remained fairly volatile.

The growing fear is that growth generated by the trillion of government stimulus dollars is only temporary and will cease as soon as the governments cease funding the various programs, most probably within the coming year. Thus, the term “double-dip” has come into use.

In order to truly declare an end to the recession, countries should be experiencing substantial sustained growth in consecutive quarters. This has failed to materialize yet in any significant fashion. Certainly, there is reason to be optimistic but consumers have yet to display a return to a strong buying mentality. Many are still in a savings mode, particularly in the United States. Even though interest rates are at an historic low in the U.S., many consumers fear taking on any more debt. Canadians are faring better than their neighbours in the U.S., but they, too, are still leery about the economy, as unemployment is still rampant in the nation, especially in the manufacturing sectors.

Economists hope that governments will not make the mistake of ending the stimulus packages too early. A good beginning can lead to a stable financial future if the elements of recovery are managed properly and timely.

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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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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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August 17, 2009

The Value of Customer Service

Filed under: canadian business,customer service,small busines — corpcentre @ 10:12 pm

At the end of the day, your product may be outstanding and you may provide terrific value, but, let’s face it, times are tough for small businesses. People are spending less today. Many businesses have limited funds available to maintain or increase sales. What, then, is a business to do? The answer lies with your most important resource: your customers.

It all boils down to customer satisfaction and customer loyalty. Maintaining your customer base is vital. Therefore, it’s important to know what the customer is thinking. Businesses have to establish methods to listen to their customers and, no less important, to respond. Customer feedback should be viewed as a gift to your business.

Far too many businesses have become unreachable, preferring to communicate with their customers via text messages or e-mails. They have forgotten the importance of the personal touch. When was the last time you initiated telephone contact with a long standing customer to see why they have reduced their orders? One telephone call may be a terrific investment. You may discover that the customer has new needs or has been upset by a small matter that you were unaware of. Informal surveys can provide a wealth of information to help strengthen your business.

Business owners should not fear confrontation with the “disgruntled customer” as opening a Pandora’s Box. Studies have shown that most disgruntled customers will not voice their opinion but will simply take their business elsewhere. Only 4% of disgruntled customers have mere complaints. Most have legitimate issues. The same studies have concluded that a 5% increase in customer loyalty can have a direct positive long term increase on a company’s bottom line by anywhere from 25% – 125%.

The business owner who invests time in customer service is making a wise investment in these difficult financial times.

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