Technology – The Heat Is On (continued)

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TECHNOLOGY The Heat Is On (continued) Upgrade to multi-glazed windows with low-emissivity coatings. Windows Workplace windows should have at least two layers of glass with an inert gas (e.g., argon) sandwiched between the layers. Normal double-glazed windows have an R-value (i.e., the ability of material to resist the transfer of heat) of 2.0; triple-glazed windows provide an R-value of 6.0. These windows should have insulated edge spacers to reduce condensation, insulated frames, and low emissivity coatings that reduce heat loss from within and allow solar energy to enter. Multi-glazed windows not only prevent heat from escaping, they also prevent the entry of unwanted heat from the summer sun. Because of their thickness, multi-glazed windows reduce the effect of road noise and are harder to break than single-pane windows. Maximize the return on your window investment by understanding the benchmark ratings established by the Canadian Standards Association (CSA). For instance, air tightness is measured from A1 to A3, water tightness rated from B1-B7, and wind load resistance from C1 to C5. The higher the number within each measurement category, the better the window. Light-Blocking Curtains To supplement new high-R and CSA-rated windows, you may be well advised to invest in curtains […]

Technology – The Heat Is On

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TECHNOLOGY The Heat Is On   A review of your HVAC system may show you how to improve your bottom line by saving on the cost of energy. Because lighting, heating and cooling represent 19%-25% of the cost of operating a commercial business, control of energy costs is essential to improving profit margins. A reduction of even 10% in these costs can produce a significant improvement. But, because Canada is located in a part of the world where temperatures can range from 40C below zero to 35C above, it is inevitably expensive to keep internal temperatures at levels needed to maintain comfortable working conditions through the changing seasons. Heating and Air Conditioning The best means of controlling the temperature in the working environment is to install commercial programmable thermostats set to the workplace schedule. Thermostats can maintain comfortable temperatures during working hours, then be turned down or even off during nights, weekends, or holidays, when the workplace is not being used. Managing temperatures in this way can contribute significantly to the bottom line. Smart thermostats have auto sensors that recognize when people enter or leave the work area. Once everyone has left for the day, the system automatically reverts to […]

Management – Pricing Your Product or Service (continued)

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MANAGEMENT Pricing Your Product or Service (continued) Price Changes Changing prices should be handled with care. Regular customers are familiar with your prices and if costs suddenly surge there may be a reduction in sales. If you have to change prices, remove the old price tags and relabel. Customers look at price but see value. Provide Comparison Shoppers may be looking at prices, but they are seeing value. Offer products/services across a spectrum of values (i.e., extras cost more). The automotive industry provides a classic model of this merchandising approach: a base model with the price rising as features are added. This approach connects the purchaser to your value proposition. Power windows, heated seats and a high-end sound system are available on some models but does the consumer perceive them as having value for them? Boutique Niche Once in a while, you may have a unique or trendy product/service or perhaps you supply products/services associated with special holidays such as Christmas, Chanukah, Valentine’s Day, special events such as weddings, etc. These times may allow you to price on a value-added basis rather than cost-plus-markup because the clientele’s perception of what is needed gives them permission to spend more than they would […]

Management – Pricing Your Product or Service

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MANAGEMENT Pricing Your Product or Service Correct pricing can mean the difference between business success and failure. Setting the price point for your product or service is not simply the process of determining the cost of production then adding a mark-up. It is more a matter of understanding the price the consumer will accept as the value of your product or service and keeping the costs of production to a level that will give you a profit at that price. Consumers Buy for Value Cost incorporates all the expenses incurred to bring a product or service to a customer or client. Costs include: parts, labour, production machinery, manufacturing space, administration, and transportation to the consumer. These are the true costs of production and a starting point for determining the price to the customer. It is ultimately the consumer who decides the value of your product or service to them and thus what they are willing to pay. This will be the price that moves your product off the shelf. Perception Is Everything If a product is not moving and the price is reasonable given the cost of production and the price of competitive products, it may be that the seller has […]

Management – The High Cost of Low Interest Rates (continued)

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MANAGEMENT The High Cost of Low Interest Rates (continued) Canadians are extending repayment periods. On the Home Front At the end of Q1 of 2017, the ratio of Canadian household debt to disposable income was 1.67:1 or $1.67 of debt for every $1 of disposable income. Canadians borrowed $27.5 million in the first quarter, of which mortgages accounted for $20.9 billion. Not only are Canadians borrowing a lot of money, they are extending the periods of repayment for some expensive items. Recent statistics indicate that in excess of 40% of all new vehicles purchased are financed from 61 to 72 months; loans extending from 73 to 84 months now make up almost 20% of new vehicle loans. Home equity lines of credit (HELOCs) have increased as well. There are currently about three million HELOC accounts in Canada; the average outstanding balance in each account is estimated at $70,000. For a moment, consider that the owner-manager, in addition to the business debt that has to be serviced, has the following personal debt with the same interest rates as the business. Residential Mortgage Mortgage: $400,000 amortized over 25 years at 3% Interest for first year: $11,851 Interest paid over five years: $55,833 Interest […]

Management – The High Cost of Low Interest Rates

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MANAGEMENT The High Cost of Low Interest Rates Even when interest rates are at historic lows, interest costs can be significant for businesses and owner-managers. The Business The significant rise in the cost of equipment, vehicles, real estate, and inventory has prompted many businesses to increase business debt. Low interest rates, combined with the ability to obtain larger loans with extended payment terms, have allowed businesses to operate in a “business as usual” mode with less consideration for the actual cost of borrowing. To give some idea of the effect of even low interest rates on an owner-managed business, the following key elements of most businesses have been put forward as an example of the effect of interest costs on a business. The effect of domestic borrowing has been added to show the full impact of current interest rates on the owner-manager. Since lending rates vary widely depending on a variety of factors such as risk, item to be funded and the term, and are usually negotiated, the interest rates used below have been chosen at random from Internet sources; calculations are approximate and for illustrative purposes only. All loans have been made effective June 1, 2017.   Commercial mortgage: […]

Taxation – Changes to Income Tax Rules for 2017 (continued)

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TAXATION Changes to Income Tax Rules for 2017 (continued) Indexing RRSP contributions, tax brackets, and various tax credits will increase in 2017 to reflect the adjustment for inflation as measured by the Consumer Price Index (CPI). The percentage increase for 2017 has been pegged at 1.4% (i.e., the 2017 personal exemption will increase to $11,635 from $11,474 in 2016). To capture information on the new levels for all tax credits and other deductions that have been indexed, you should visit the CRA website page: “Indexation adjustment for personal income tax and benefit amounts” http://www.cra-arc.gc.ca/tx/ndvdls/fq/ndxtn-eng.html The notable exception to the inflationary increase is the Tax Free Savings Account that will continue to have a $5,500 per annum maximum contribution limit. Work in Progress Prior to March 22, 2017, unbilled work in progress was allowed to be deferred until billed to clients. This deferral allowed certain designated professionals (i.e., lawyers, dentists, doctors, and accountants) to delay the recognition of income until the year when the work was invoiced to clients. Effective March 22, 2017, this deferral of work in progress was eliminated, resulting in an immediate income inclusion of work in progress. A transitional relief will be available over a two-year period […]

Taxation – Changes to Income Tax Rules for 2017

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TAXATION Changes to Income Tax Rules for 2017 Be aware of changes to the income tax rules that will affect your 2017 filing. For those already thinking about their 2017 income taxes, the following summarizes some of the changes from 2016. Tax Credits The child tax credit for arts and fitness is gone. Since this tax credit was capped at a maximum of $500 for fitness and $250 for arts per child in 2016, its removal will not likely have a major impact on most people’s 2017 return. Education The tax credit for education and textbooks for full- or part-time students was eliminated effective December 31, 2016. Taxpayers with unused tax credits from 2016 or prior years will be able to carry them forward and apply them against future taxes. The tuition tax credit is, however, still in effect. In recognition of the need to support education in technical skills, the number of courses eligible for the tuition tax credit will be increased. Occupational courses provided by post-secondary institutions within Canada will be granted the tax credit. If a bursary is provided, the amount will likely qualify for either the full or basic scholarship exemption. Examination fees paid to take […]

Technology – Connecting for Profit

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TECHNOLOGY Connecting for Profit WiFi offers new retail marketing strategies. The use of cut-out and email coupons to create consumer awareness of your business and your products has been around for a long time, but their effect on your revenue and profit is notoriously hard to measure. Some marketers are now hoping to get around this problem by offering WiFi services to their in-store customers to get them to stay within the store environment. This idea is based on the well-tested principle that the longer a person stays in the store, the more likely they are to buy something. In fact, a recent survey has shown that 62% of customers will linger longer in shopping environments that provide free WiFi. The same study showed that half of those customers actually spend more money while they remain in the store. Let’s Use WiFi This system works by informing the walk-in customer they have access to free WiFi as an incentive to stay in the store. It does not matter whether the person is using a smart phone, tablet or computer; WiFi is platform agnostic and will work with almost any mobile device. Implementations vary; however, most businesses either post a passcode, […]

Management – The Five Finger Discount

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MANAGEMENT The Five Finger Discount Support trained staff with physical theft deterrents. Physical Deterrents the Next Line of Defence Staff training to reduce potential shoplifting must be supported with physical theft deterrents. Ensure every part of the store can be seen by sales staff at all times. Blind spots, dressing rooms and tall shelving units make theft easy. Users of dressing rooms expect privacy, but there can be no such expectation on the store floor. Security cameras should be placed strategically to monitor the floor area. A large monitor at check out will provide live video from every camera to enable cashiers to view suspicious actions. Placing mirrors to view blind spots is an alternative to cameras although not as effective since staff cannot always be watching. Expensive merchandise should be looped through an alarm box or fitted with Radio Frequency Identification (RFID) devices that sound an alarm as soon as the product is removed from its packaging or its shelf space. Please Leave the Store You have the right to ask someone to leave your store. Most merchants are hesitant to do this because they do not wish to create conflict or negative publicity. Nevertheless, you are well within […]

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